Federal regulatory body, the Consumer Financial Protection Bureau (CFPB), announces it will not implement a rule requiring small businesses to gather specific data.
The Consumer Financial Protection Bureau (CFPB) has announced that it will not enforce its small-business data collection rule, which was finalized in 2023 under Section 1071 of the Dodd-Frank Act. The rule, which requires lenders making at least 100 small business loans annually to collect and report detailed demographic and loan data on small business applicants, remains entangled in ongoing litigation and legislative challenges as of mid-2025.
On his first day as the CFPB's acting director, Russ Vought notified the Federal Reserve that the bureau would not use any unappropriated funding for the implementation of the rule. This decision not to enforce the rule comes roughly 2.5 months before the lenders would have had to begin collecting the data.
The compliance burden for the aforementioned lenders has been eased, as they are no longer required to collect the specified data. However, the CFPB can still choose to collect the data in the future, but any lenders who do so may risk penalties from future iterations of the CFPB if they don't.
The CFPB's decision not to enforce the rule has been met with criticism. The CEO of Rise Economy, Jesse Van Tol, has stated that it is subverting the rule of law and preventing transparency for the public. The CFPB's statement on Wednesday was unusual for the bureau, as it has been loath to issue press releases, especially those with regulatory implications.
Lenders originating at least 500 per year must now collect data by Jan. 16, 2026, and lenders that originate at least 100 each year must comply by Oct. 18, 2026. However, the compliance time frame for the small-business lending rule has been delayed by 290 days, pushing the deadline for lenders originating 2,500 or more small-business loans per year to begin collecting data to July 2025. The small-business data collection rule would have required lenders originating 2,500 or more small-business loans per year to collect race, gender, LGBTQ status, and demographic data from borrowers, but this is no longer the case.
The CFPB has not mentioned any plans to purchase licensing rights in its recent statement. The bureau has instead focused its enforcement and supervision resources on pressing threats to consumers, particularly servicemen and veterans. The CFPB has also announced it will not prioritize enforcement or supervision actions regarding entities outside the stay imposed in the Texas Bankers Association v. CFPB case.
The Supreme Court has upheld the CFPB's funding structure. However, the CFPB's justification for not enforcing the rule, citing lack of resources, has been met with pushback. Some lawmakers, including Sen. John Kennedy, R-LA, have argued that the rule "perverts our intention of Section 1071 of the Dodd-Frank Act" and violates entrepreneurs' privacy.
In summary, the CFPB's small-business data collection rule remains unimplemented and contested, with a substantial compliance burden cited by lenders fueling ongoing legal and legislative efforts to amend or delay its enforcement. The rule, which was finalized in 2023, has been the subject of litigation since it was issued, with a Texas bank and the state's banking trade group suing the CFPB to block the rule less than a month after it was issued. The rule requires lenders making at least 100 small business loans annually to collect and report detailed demographic and loan data on small business applicants, exceeding the 13 fields originally mandated by Congress to include a total of 81 data points about owners’ race, gender, ethnicity, and more. The compliance time frame for the small-business lending rule has been delayed by 290 days, pushing the deadline for lenders originating 2,500 or more small-business loans per year to begin collecting data to July 2025. The small-business data collection rule would have required lenders originating 2,500 or more small-business loans per year to collect race, gender, LGBTQ status, and demographic data from borrowers, but this is no longer the case. The CFPB has announced it looks forward to resolving the status of the regulation and ensuring fair, consistent treatment for all entities impacted by the regulation.
Finance implications of the CFPB's decision not to enforce the small-business data collection rule may affect the disclosure of demographic data in the future, potentially impacting businesses and lenders in their financial reporting and decisions. Critics argue that the decision may hinder business-politics relations by obstructing transparency and access to important data, which is crucial for general-news reporting and understanding of market trends.
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