CBA Submits Comments to CFPB on Small Business RFI

On Wednesday, September 13, 2017, CBA submitted comments on the CFPB’s Request for Information about the small business lending market.  Section 1071 of the Dodd-Frank Act, which amends the Equal Credit Opportunity Act (ECOA) to require financial institutions to compile, maintain, and report information concerning credit applications made by women-owned, minority-owned, and small businesses.  Under the section, every financial institution must inquire of any business applying for credit whether the business is a small business, or a women- or minority-owned business, maintain a record of the information separate from the application, and report the information along with related information about the application to the CFPB.  The information must be made public on request in a manner to be established by regulation, and will be made public annually by the CFPB.


CBA urged the CFPB to keep top of mind that although Section 1071 mandates this rule, it is not as simple as data collection efforts undertaken on other lending products such as residential mortgages. We noted that the notion that business lending parallels nicely to residential mortgage lending is misplaced and the use of Home Mortgage Disclosure Act-like reporting for business lending activity to ferret out potential discrimination is a tremendously flawed premise because the two types of transactions differ inherently in many key aspects.