CFPB’s Small Business Lending Data Collection Rulemaking

JD Supra, October 18, 2021, CFPB’s Small Business Lending Data Collection Rulemaking

Last month, the Consumer Financial Protection Bureau (CFPB) issued a long-anticipated proposed rule (published in the Federal Register on October 8, 2021) requiring regulated financial institutions to collect and report small business lending data to the Bureau.

The COVID-19 pandemic and disaster relief programs in response highlighted the fair lending risks in the small business lending market. In introducing the proposed rulemaking, the CFPB’s Acting Director said:

[The Paycheck Protection Program] was plagued with problems—the smallest businesses had trouble accessing the funds, and, at least initially, reports were widespread that Black and Hispanic entrepreneurs had trouble accessing funds as well. For example, testing conducted by the National Community Reinvestment Coalition showed that Black women entrepreneurs, in particular, were seldom, if ever, encouraged by lenders to apply for PPP loans, even though they were as well-qualified as others who were encouraged to apply.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

Complete the form to download the full report: