OVERVIEW

In March 2023, the Consumer Financial Protection Bureau, or CFPB, finalized regulations to put into effect Section 1071 of the Dodd-Frank Act. These regulations represent a significant step towards enhancing transparency in the way lenders serve businesses owned by individuals from diverse backgrounds, including people of color, women, and the LGBTQ+ community. This development is a crucial milestone in the ongoing effort to combat discrimination in small business lending.

The implementation of the Section 1071 rule is poised to have a positive impact on underserved businesses, as it would require lenders to annually report on their lending activities, broken down by factors such as race, ethnicity, gender, and sexual orientation of the business owners. This increased transparency will likely lead to expanded lending opportunities for historically marginalized communities. It's slated to also benefit lenders by providing improved, competitive insights, new market opportunities and minimal compliance costs compared to income.

PCRG and its members played a pivotal role in shaping these final rules through submitted comments and discussions with elected officials.

The US Senate voted on the Congressional Review Act resolution to cancel the recent CFPB’s Section 1071 regulations for Small Business Lending Disclosure — a necessary reform that PCRG and its members fought nearly twenty years to achieve. 

In December 2023, President Joe Biden vetoed the resolution.

“If enacted, this resolution would harm all those that stand to benefit from expanded transparency and accountability,” Biden said in his letter to the US Senate, “By hampering efforts to promote transparency and accountability in small business lending, Republicans are siding with big banks and corporations over the needs of small business owners.  Small businesses are the engines of our economy, and my Administration will not support policies that hurt their ability to thrive and grow.”

HELPFUL LINKS AND RESOURCES

CONSUMER FINANCE PROTECTION BUREAU

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