The applicant must provide the minority-owned business status and/or women-owned business status. The institution would not be permitted or required to report these data points based on visual observation, surname, or any other basis if the applicant chooses not to provide the information. More details to come on instructions on how to collect and report minority-owned business status, womenowned business status, and principal owners’ ethnicity, race, and sex. This phase of the rule will require targeted and detailed training for your staff to avoid actual or perceived discriminatory treatment. 5. Begin Tracking Data On A Rule‑Compliant System The final rule should include a sample tracking sheet. However, we recommend that you strongly consider automation of this function. With more than 20 data points required to be reported under the proposed small business data rule, automation is key to efficiently utilizing staff and minimizing data collection errors. Ideally, these data points should be captured during the loan application or booking process. Check with your core provider to determine if they have or are considering automating the process as data is entered directly into their system. Additionally, if you are on a loan origination platform, your provider will most likely build a data-gathering document into that system, so check with your provider in advance. What if your institution doesn’t automate this function? In that case, Excel can be a useful tool for maintaining the required data points as long as you have primary and backup staff to maintain the spreadsheet, as well as an independent reviewer to perform a periodic spot-check of the data. The 1071 rule requires that institutions collect data on a calendar-year basis and report their data to the bureau by June 1 of the following year. The proposed rule will allow the CFPB to make the data available to the public annually. 6. Set Up An Audit System To Periodically Check Small Business Loans By Cross‑Referencing To Tracking Document One of the primary reasons for the rule is to ensure that financial institutions are addressing the credit needs of minority small businesses and that institutions are pricing and determining other loan terms in a manner that does not discriminate against the minority-owned small business. The development of analytical reports and periodic monitoring of small business lending is essential for compliance and to identify areas of concern, mitigation, and reporting. Consider a quarterly compliance scorecard approach to identify loan pricing exceptions and set baseline performance indicators. 7. Finally, Consider Assistance From Third‑Party Resources From educating and clarifying rule components to creating policies and procedures, a third-party provider can make compliance easier. Such a resource can: • Alleviate any staff bandwidth issues • Avoid interruptions in daily job requirements • Assist with best practices to gather information • Assist with the creation of or adaptation of current collection and/or loan pricing systems to ensure compliance with the rule We recommend including detailed procedures for lenders and other staff collecting this data. 14 NEBRASKA INDEPENDENT BANKER
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