Fintechs are launching products and services to help equipment financiers meet compliance requirements as the industry embraces digitalization.
At the same time Section 1071 of the Dodd-Frank Act is increasing demand for technology from equipment lenders, financial services automation is expected to grow 14.2% annually to $20.7 billion to over the next eight years, according to research and consulting firm Global Market Insights.
With compliance a major driver of tech investment in equipment finance, fintechs are seeing a “resounding” increase in demand for their services as equipment lenders look to automate and accelerate certain tasks, Philip Taliaferro, chief growth officer at Lehi, Utah-based online lending marketplace Lendio, told Equipment Finance News. The company specializes in helping small businesses connect with lenders.
“My observation is that the small business lending world, in general, whether it’s equipment finance or other types of products, was relatively light on regulatory oversight,” he said. “The areas where we’ve seen an increased focus, many of them apply to equipment finance.”
Tech for Section 1071
Section 1071 of the Dodd-Frank Act mandates financial institutions collect and report data from loan applications by small businesses to the Consumer Financial Protection Bureau.
This will create “significant paperwork and data management burdens that slow down credit access for those small businesses,” Crest Capital President Mark French previously told EFN. Finalized in 2023, the rule is slated to take effect July 18.
Software providers are beginning to recognize the need for technology to address these burdens. Wolters Kluwer, for one, has created a Section 1071 reporting product, Small Biz Wiz. The subscription-based platform interprets small business data to ensure that lenders are meeting reporting requirements, Director of Product Management Timothy Collins told EFN.
The solution allows lenders “to run and customize various reports to analyze lending among different assessment areas and demographic segments,” he said. “… And then the data will be preserved, so when examinations happen, all the answers are still there.”
Flexible financial solutions
While some fintechs are launching products specifically for compliance, others are building out their existing services to help lenders meet regulations, Bill Verhelle, chief executive at Fairport, N.Y.-based equipment financing platform QuickFi, told EFN.
“We didn’t build QuickFi for 1071, or even for compliance necessarily, but we realize that it’s actually quite easy for us to solve” challenges related to it, he said.
The company’s existing embedded lending solution acts as “a digital survey that’s communicated in a secure and confidential manner,” Verhelle said. “It is fully encrypted on a platform that allows the financial decision-maker to answer a survey question about minority status or female-owned status in a confidential, secure way. And it gives the lender an audit trail.”
Similarly, Lendio is developing a flexible financial service that also supports compliance needs as a byproduct, Taliaferro said.
This approach allows lenders to prolong their partnerships with fintechs, rather than integrating entirely new technologies, Ryan Hemingway, chief growth officer at Salt Lake City-based Continental Bank, told EFN. The lender recently partnered with Lendio primarily to help increase “equipment lending volume nationwide.”
Compliance “wasn’t a real driver to start working with Lendio,” he said. “But anytime that you’re in a regulated environment like we are, you always have what I would call ‘regulatory risk’ or ‘compliance risk.’ So, we have our strategic partnerships for these risks.”
Continental is using Lendio’s technologies to “catch errors” and track small business data to avoid any missteps in its Section 1071 reporting while optimizing finance operations as a whole, Hemingway said.
The third annual Equipment Finance Connect at the JW Marriott Nashville in Nashville, Tenn., on May 14-15, 2025, is the only event that brings together equipment dealers and lenders to share insights, attend discussions on crucial industry topics and network with peers. Learn more about the event and register here.
