CFPB issues final 1071 rule on small business data collection
On March 30th, the CFPB issued a final rule under section 1071 of the Dodd-Frank Act. A little history behind this rule, section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (ECOA) and required financial institutions to collect data on small business loans. The final rule published on March 30th enacts this requirement. The CFPB has also published an executive summary and factsheet that may be helpful, as the final rule is 888 pages long.
Is Your Credit Union Covered?
Under the rule, a credit union is covered if it “originated at least 100 covered credit transactions for small businesses in each of the two preceding calendar years.”
What is a Small Business?
The final rule defines a small business as a business with gross annual revenue of $5 million or less in the preceding calendar year. This is the same definition as in the Small Business Act. According to the CFPB, a credit union may “rely on an applicant’s representations regarding gross annual revenue (which may or may not include affiliate revenue) for purposes of determining small business status.” However, if the credit union receives verified information, the credit union must use the verified revenue.
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