Under the required small business lending rule, lenders will collect and report information about the small business credit applications they receive, including geographic and demographic data, lending decisions, and the price of credit.
Last week, the Consumer Financial Protection Bureau (CFPB) finalized a rule on lending data to increase transparency of banks’ small-business lending.
Specifically, under the new rule, traditional and alternative financial institutions will collect and share information about small-business loan applications, including details about location, demographic aspects, lending decisions and credit pricing.
Centered around promoting economic development and combatting unlawful discrimination, CFPB says the data collected will create a more comprehensive market view and empower data-driven decision-making.
All lenders making more than 100 small-business loans annually will be required to report data, and lenders originating less than 100 loans per year will still be required to adhere to fair lending laws. The rule also covers diverse forms of credit such as closed-end loans, lines of credit, business credit cards, online credit products and merchant cash advances.
Follow NSBA as we continue to monitor the effects of this new rule, and read the fact sheet from CFPB here.