38545 Partner with us for: • Loan participation purchases and sales* • Bank stock financing • Bank executive and employee financing *We do not reparticipate loans. Tracy Peterson Call me at 480.259.8280 Based in Phoenix, Ariz. Serving Arizona, Colorado and Kansas Our Mission Is to Help You Succeed small businesses in each of calendar years 2022 and 2023 but subsequently originates at least 100 such transactions in two consecutive calendar years, it must comply with the requirements of this rule, but in any case, no earlier than Jan. 1, 2026. The new rule provides that covered financial institutions may begin collecting applicants’ protected demographic information one year before their compliance date to help prepare for coming into compliance with this final rule. The CFPB is also adopting a new provision to permit financial institutions that do not have ready access to sufficient information to determine their compliance tier (or whether they are covered by the rule at all) to use reasonable methods to estimate their volume of originations to small businesses for this purpose. While the new rule requires data collection and reporting for only those that make at least 100 loans annually, the rule will cover the vast majority of bank small business lending, based on the CFPB’s analysis. In addition, the CFPB notes that lenders originating less than 100 loans per year will still have to adhere to fair lending laws (even though they are not having to report this loan data). Final Rule & Additional Resources The final rule may be accessed by scanning the QR code. https://files.consumerfinance.gov/f/ documents/cfpb_1071-final-rule.pdf The CFPB has also developed a number of resources for financial institutions, including: • Filing Instructions Guide (FIG) for reporting the newly required data • Small entity compliance guide • Frequently asked questions (FAQ) • A set of Quick References • Sample data collection form from the regulation • Slide deck from a recent RegCast on the coverage of the rule Scan the QR code to access these resources. As the agency develops additional resources related to this rule, we can expect these to become available on this webpage. https://www.consumerfinance.gov/ compliance/compliance-resources/ small-business-lending-resources/smallbusiness-lending-collection-and-reportingrequirements/ To emphasize financial institutions’ obligations to collect this important data, the CFPB is also issuing a policy statement noting that it intends to focus its supervisory and enforcement activities in connection with the new rule on ensuring that lenders do not discourage small business loan applicants from providing responsive data, including responses to the requests to provide demographic information about their ownership. This policy statement is available by scanning the QR code. https://files.consumerfinance.gov/f/ documents/cfpb_1071-enforcement-policystatement.pdf Implementation Note It is possible that the implementation schedule spelled out in the final rule (discussed above) will be delayed. A lawsuit has been filed, petitioning the court to push the implementation dates back to allow more time for financial institutions to develop their compliance programs for this rule. So, the expected schedule may be delayed, or may not be. One thing to keep in mind is that, even if the implementation dates are pushed back, they will eventually arrive. Therefore, all financial institutions that are active in small business lending should proceed with their planning and implementation process to be ready to comply when the rule does become effective for their institution. William J. Showalter, CRCM, CRP is a Senior Consultant with Young & Associates, Inc. (www.younginc.com), with over 35 years of experience in compliance consulting, advising and assisting financial institutions on consumer compliance and compliance management issues. He also develops and conducts compliance training programs for individual banks and their trade associations and has authored or co-authored numerous compliance publications and articles. Bill can be reached at (330) 678-0524 or wshowalter@younginc.com. 11 In Touch
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