C 1071 Data Collection TIPS AND TRICKS By Paula S. King, CPA, Abrigo CFPB 1071 Rule Has Significant Requirements The Consumer Financial Protection Bureau’s (CFPB) small business data collection rule, often referred to as the 1071 rule, is set to be the most significant effort of data collection and reporting for financial institutions in nearly 50 years. Banks and credit unions must prepare to meet the rule’s requirements by understanding what data must be collected, when it needs to be collected and how to streamline the process to ensure compliance. This article describes the scope of the CFPB small business lending data regulations and offers practical tips for banks and credit unions to manage their data collection processes efficiently. Understanding the rule and preparing adequately will help your financial institution stay ahead of deadlines and avoid compliance problems. The Scope of Small Business Data Collection The CFPB’s small business data collection rule implements Section 1071 of the Dodd-Frank Act, which directs the bureau to collect certain demographic data from small business lenders. The primary goal of the federal rule is to facilitate fair lending enforcement and identify the credit needs of women- and minority-owned businesses. Under this rule, any entity engaged in lending activities is required to collect and report demographic data during the application process. This includes not just banks and credit unions but also finance companies, online lenders, Community Development Financial Institutions (CDFIs), government lenders and nonprofit lenders. The only lenders excluded from these requirements are those that originated fewer than 100 covered credit transactions in each of the two calendar years preceding their compliance date. Requests for additional credit tied to an existing loan do not count as originations when determining whether an institution is covered. The rule requires that lenders collect and report data for all small business credit applications from any business with $5 million or less in gross annual revenue its preceding fiscal year. Credit transactions covered by the rule include applications or requests for: • Loans. • Lines of credit. • Credit cards. • Merchant cash advances. • Credit products used for agricultural purposes. • Refinancings where existing debt is satisfied and replaced by a new obligation for the same borrower. Compliance Deadlines for 1071 Small Business Lending Data Regulations Lender deadlines for 1071 compliance are initially determined by the volume of small business loans originated in each of the calendar years 2022 and 2023 or in 2023 and 2024. Abrigo has a one-pager summarizing the 1071 data collection and reporting deadlines. Here’s a general overview of when different types of lenders must begin data collection, based upon their origination thresholds: • Lenders that originate at least 2,500 small business loans in each of the years must start collecting data on covered applications by July 18, 2025. • Lenders that originate at least 500 covered loans in each of the years must begin data collection by Jan. 16, 2026. • Lenders that originate at least 100 small business loans in each of the years must collect application data starting Oct. 18, 2026. Colorado Banker 6
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