What does CFPB’s new business loan data collection rule mean for credit unions?
It means doubling down on helping your business members become better at what they do.
In March, the Consumer Financial Protection Bureau finalized a new rule that will require lenders to collect and report key data points about their small-business lending, including information about business loan pricing, loan denials, business owner demographics, and minority- and women-owned business enterprise status. CFPB’s chief concern is addressing lending practices that discriminate against women-owned, ethnic minority-owned and LGBTQ+-owned businesses.
Addressing this concern should be no problem for credit unions, since their people helping people philosophy underscores the idea that having access to capital should have nothing to do with the borrower’s color, ethnic background, religious beliefs, gender or sexual orientation. Indeed, having access to capital should have everything to do with whether the business is being controlled and operated by people who understand the structure of their business model. The owners/managers should have the skills in place to run a viable business and demonstrate that the business they’re running is economically sensible and can repay the debt being requested.
Bottom line, the new CFPB reporting requirement only serves to underscore the fact that it’s a great idea for credit unions to help their business members become the best business owners/managers—and therefore potential borrowers—they can be.
History of the New Business Loan Requirement
CFPB’s newly announced reporting activity requirement has been in the works since the Dodd-Frank Act was passed in 2010, creating the agency to be a watchdog over consumer financial services. Small businesses have been in the thought process of CPFB ever since the agency was given a seat on the Federal Financial Institutions Examination Council.
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