CFPB proposes Section 1071 revisions, narrowing scope of data collection

The Consumer Financial Protection Bureau is proposing major revisions to its Section 1071 small business lending rule, aiming to simplify compliance and narrow the scope of required data collection, despite uncertainty about the agency’s funding. 

Despite the agency’s plans, the CFPB could run out of money in early 2026 after the Justice Department ruled the agency cannot receive funds from the Federal Reserve, according to a Nov. 10 notice filed with the U.S. District Court for the District of Columbia. The decision represents another major reduction in the CFPB’s authority and financial independence. 

Read more about Section 1071 here. 

However, according to a CFPB release set to be published on the Federal Register on Nov. 13, the CFPB intends to begin data collection with a narrower scope focused on core lending products, lenders and statutory data points. 

“Over time, as the CFPB and financial institutions learn from early iterations of data collections, the CFPB could consider amending the rule,” the release statea. “The gradual development of data collection under the Home Mortgage Disclosure Act and its implementing Regulation C over the past 50 years provides precedent for an incremental approach.” 

Key proposed changes include: 

• A higher threshold for coverage: Only lenders originating at least 1,000 small-business credit transactions in both 2026 and 2027 would be required to comply, up from 100. 

• A single compliance date: All covered institutions would begin reporting on Jan. 1, 2028, replacing the previous tiered schedule. 

• A narrower data set: The proposal would eliminate data points including application method, recipient, pricing, denial reasons, number of workers and LGBTQI+ ownership, focusing instead on core demographic and statutory information, after the initial 81 data points under the original rule. 

• A refined definition of small business: The “small business” definition would be tightened to $1 million in gross annual revenue, down from $5 million. 
• New exclusions: Farm Credit System lenders and certain lending products such as merchant cash advances, agricultural credit and small-dollar loans, under $1,000, would be excluded. 

The changes enhance data quality and minimize burdens on lenders while maintaining fair-lending oversight and compliance with executive directives, according to the CFPB. The bureau intends to reopen the public comment period for thirty days after the Federal Register publication this week. 

Industry leaders react 

The Texas Bankers Association (TBA) praised the decision. 

“The reissuance of Section 1071 is a major victory for banking regulatory reform and a pivotal win for community banks,” President and Chief Executive Chris Furlow said in a release today. “As the original plaintiffs against CFPB on 1071, the Texas Bankers Association and Rio Bank are very pleased to see the current leadership take substantive action to reissue and replace the deeply flawed 2023 Final Rule.” 

Along with its member Rio Bank and the American Bankers Association, TBA filed the initial lawsuit in April 2023 that led to an injunction against the CFPB’s Section 1071 that was issued in July 2023. The lawsuit opposing the rule has saved lenders more than $6.9 billion in compliance costs and prevented the release of sensitive small business data, according to the release. 

Meanwhile, the Equipment Leasing and Finance Association considers the revisions a “meaningful step toward advancing transparency and fairness in small business lending,” according to a LinkedIn post today. 

“This is clearly a move in the right direction to reduce regulatory burden and an opportunity to increase access to capital for small businesses,” President and Chief Executive Leigh Lytle said in the post. “This rule will increase lenders’ ability to provide capital and equipment that fuels the American economy.” 

Check out our exclusive industry data here.