The Consumer Financial Protection Bureau (CFPB) has finalized a scaled-back version of its small business lending rule under Regulation B, sharply narrowing which lenders must comply and what data they must collect.
Published May 1 in the Federal Register, the rule revises the Bureau’s Section 1071 framework under the Equal Credit Opportunity Act, which requires lenders to collect and report data on small business credit applications.
The most significant change: lenders must now originate at least 1,000 small business loans annually — measured over the prior two years — to fall under the rule. That’s up from the original 100-loan threshold, effectively carving out a large share of smaller institutions.
The CFPB said the revised framework still captures the majority of the market because lending activity is concentrated among larger players, though fewer institutions will be required to report.
Narrower Dataset, Clearer Exclusions
The final rule also trims the scope of required data collection, removing certain demographic data points and reducing reporting complexity.
It further clarifies what counts as covered credit, excluding several categories that had raised concerns among lenders, including merchant cash advances, agricultural lending, and certain small-dollar transactions.
In addition, the Bureau revised the definition of a small business, lowering the revenue threshold to roughly $1 million, tightening the population of borrowers covered under the rule.
Compliance will be determined based on lending activity in 2026 and 2027, with reporting requirements taking effect in 2028 — extending a timeline that has already been delayed multiple times following legal challenges and industry pushback.
The changes come alongside a separate CFPB rule finalized in April that reshapes fair lending enforcement under the Equal Credit Opportunity Act by narrowing how disparate impact is applied and shifting focus toward intentional discrimination. Together, the moves narrow the data available to regulators while raising the bar for proving discrimination.
MBA Backs Changes
The Mortgage Bankers Association backed the revisions, framing them as a step toward a more workable rule.
President and CEO Bob Broeksmit said the changes will “reduce complexity and cost” for lenders and make the framework easier to implement.
At the same time, the group made clear its concerns with the underlying statute remain. MBA reiterated that issues tied to Section 1071 itself have not been resolved, signaling the industry is likely to continue pushing for legislative changes even as the revised rule moves forward.
Why It Matters
While Section 1071 specifically targets small business lending, it sits within the same Regulation B framework under the Equal Credit Opportunity Act that governs mortgage origination, making it relevant for independent mortgage banks and lenders operating across multiple credit channels.
The revised rule creates a clearer dividing line:
- Larger institutions will carry most of the reporting burden
- Smaller lenders are largely carved out
- Regulatory focus becomes more concentrated, not reduced
For lenders, the shift eases near-term compliance strain but raises a longer-term question: whether a narrower dataset limits how regulators assess fair lending risk across smaller or nontraditional segments.
The takeaway for LOs: less immediate operational pressure, but a more targeted regulatory lens, and a policy fight that’s likely moving from rulemaking back to Congress.
