The House Financial Services Committee today voted 26-22 to advance legislation to exempt certain lenders from small-business lending data reporting requirements.
Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act to require financial institutions to compile and submit to the Consumer Financial Protection Bureau certain data on applications for credit for women-owned, minority-owned and small businesses.
The Small Lender Act (H.R. 941) sponsored by committee Chairman French Hill (R-Ark.) would exempt lenders that originated fewer than 2,500 small-business loans in each of the two preceding calendar years, as well as lenders with less than $10 billion in assets. It would also only cover loans to businesses with gross annual revenues of $1 million or less in the most recently completed fiscal year, rather than businesses with revenues of $5 million or less.
In a memo to the committee, ABA said that while its members oppose lending discrimination, the bureau under the previous administration “dramatically overstepped its statutory authority when implementing Section 1071 and adopting a final rule in 2023.”
“The CFPB’s flawed Section 1071 rule would harm small businesses across the country by creating significant privacy concerns and limiting banks’ ability to tailor loans, which would reduce access to credit and increase borrowing costs for small businesses,” ABA said.
ABA added that while the CFPB under the Trump administration plans to revise the rule, “ABA member banks continue to support targeted statutory changes to Section 1071 that will ensure the availability of credit for small businesses across the country while protecting the privacy of small business loan applicants.”
Editor’s note: This item’s headline has been updated to clarify that a House committee advanced the legislation.
