Today, the Consumer Financial Protection Bureau (CFPB) released a request for comment regarding its proposal to implement Section 1071, the portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) that required the CFPB to collect and publish small business lending data.
Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition (NCRC), made the following statement:
“We applaud the CFPB for issuing a strong proposal to gather data that’s critical to understanding the flow of credit to small businesses and to exposing abusive and unfair lending practices. This data will be vital to achieving the Biden administration’s objective to advance economic equity. The ongoing lack of small business data, particularly for businesses owned by people of color and women, is a significant barrier to understanding the true level of disparities they face. Section 1071 will change that. The new, detailed data on access to credit for businesses owned by people of color and women will help us narrow wide gender and racial disparities in access to credit.
“It is our hope that the Section 1071 data replaces the current data reported by banks for their Community Reinvestment Act (CRA) exams. The current CRA exam for small business data does not provide the details we need to make sure banks are serving the smallest businesses in underserved communities. More detailed Section 1071 data, reported to CFPB, should become the data set used in CRA exams, just like Home Mortgage Disclosure Act data, which is also reported to CFPB and then referenced in CRA exams.
“NCRC’s mystery shopping and research show that disparities in access to credit remained significant during the pandemic, crippling many businesses owned by women and people of color. Our nation must take vigorous action to reduce racial and gender inequities. Today’s rule is a strong start. We will have little chance of success in reducing disparities in small business lending without this data. This data will be comprehensive, annually released and will reveal loans and applications by race, gender and revenue size of small businesses for the vast majority of lenders issuing small business loans.”
More on Section 1071: