9/26/2023 0 Comments Cfpb ecoa![]() The purpose of Section 1071 is to “facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities for women-owned, minority-owned and small businesses.” Section 1071 covers “financial institutions,” defined as any partnership, company, corporation, association, trust, estate, cooperative organization, or other entity that engages in any financial activity. ![]() The Final Rule represents the culminating step in a 10+ year process, which included a not-so-gentle nudge from a group of community organizations that sued the Bureau for its lengthy delays and resulted in a settlement that set deadlines for completion of the process. The Bureau began examining ECOA compliance of small business programs in 2015. The Final Rule applies to a variety of entities that engage in small business lending and meet the origination threshold.įederal consumer financial protection laws typically do not apply to business-purpose credit the ECOA, though, generally applies to both consumer-purpose and business-purpose credit transactions. Under the Final Rule, covered financial institutions are required to disclose application data from Small Businesses and demographic information about credit applicants. The Final Rule implements Section 1071 of the Dodd-Frank Act, which amended the Equal Credit Opportunity Act (ECOA), to direct the CFPB to require financial institutions to collect and report loan data on women-owned, minority-owned, LGBTQI+-owned, and small businesses (collectively, “Small Businesses”) in connection with applications for credit. ![]() On March 30, 2023, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) issued its long-awaited small business lending data collection final rule (“Final Rule”).
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