Author: W. Brad Washburn, CRCM, CAMS
On May 1, 2026, the Consumer Financial Protection Bureau (CFPB) issued a revised Small Business Lending Data Collection Rule under Section 1071 of the Dodd-Frank Act (the “2026 Final Rule”), significantly scaling back portions of the original 2023 rule. The revisions reflect the Bureau’s response to industry concerns regarding compliance costs, operational burdens, and ongoing legal challenges that followed the initial rulemaking.
Key Changes in the 2026 Final Rule
The CFPB described the revised framework as an “incremental approach” to implementing Section 1071, similar to the phased expansion of reporting requirements under the Home Mortgage Disclosure Act (HMDA). The most significant changes include:
Narrower Coverage of Financial Institutions and Credit Products
The 2026 Final Rule substantially reduces the number of institutions subject to Section 1071 reporting requirements. Most notably, the CFPB increased the coverage threshold from 100 to 1,000 covered small-business loan originations annually. As a result, many community banks and other smaller lenders that would have been covered under the 2023 rule are expected to fall outside the scope of the revised rule.
The CFPB also narrowed coverage for certain credit products and transactions that were previously reportable, further reducing the number of loans subject to data collection and reporting requirements.
Updated Definition of “Small Business”
The CFPB revised the definition of a “small business” by lowering the gross annual revenue threshold from $5 million to $1 million. This change significantly reduces the number of businesses whose credit applications will be subject to Section 1071 reporting requirements.
For covered institutions, the revised definition is expected to decrease the volume of reportable applications and originated loans. Combined with the higher institutional coverage threshold, the change substantially narrows the overall scope of the rule compared to the 2023 version.
Reduced Data Collection Requirements
The Bureau also reduced the number of required data points, focusing primarily on information expressly required by the Section 1071 statute. Numerous discretionary data fields included in the 2023 rule have been eliminated, easing compliance burdens and reducing the operational complexity associated with data collection, monitoring, and reporting.
Extended Compliance Timeline
Although the rule becomes effective on June 30, 2026, mandatory compliance will not begin until January 1, 2028. The extended implementation period provides institutions with additional time to evaluate their reporting obligations, assess system capabilities, and implement any necessary operational changes.
Key Takeaways
The revised coverage criteria represent a significant shift from the original rule and may exempt many community banks that previously expected to be subject to Section 1071 reporting requirements. Institutions should carefully review the revised thresholds and definitions to determine whether they remain covered under the 2026 Final Rule.
For institutions that continue to meet the coverage requirements, the additional implementation time should be used to assess data collection processes, lending systems, reporting capabilities, and fair lending compliance programs to ensure readiness before the January 1, 2028, compliance date.
Institutions should continue to monitor developments related to Section 1071. As of this writing, several federal court challenges to the original 2023 rule remain pending, although those cases are expected to be resolved once the final rule takes effect. Nevertheless, future litigation by trade associations or other opponents of the final rule could further alter compliance obligations or implementation timelines. Similar developments occurred during the prior Trump administration, when a federal court invalidated amendments to HMDA reporting thresholds, resulting in additional regulatory uncertainty and compliance adjustments.
Steve H. Powell & Company will continue to monitor developments related to Section 1071 and provide updates as additional guidance becomes available.
Click the link below to find the final rule:
Federal Register: Small Business Lending Under the Equal Credit Opportunity Act (Regulation B)
On May 1, 2026, the Consumer Financial Protection Bureau (CFPB) issued a revised Small Business Lending Data Collection Rule under Section 1071 of the Dodd-Frank Act (the “2026 Final Rule”), significantly scaling back portions of the original 2023 rule. The revisions reflect the Bureau’s response to industry concerns regarding compliance costs, operational burdens, and ongoing legal challenges that followed the initial rulemaking.
Key Changes in the 2026 Final Rule
The CFPB described the revised framework as an “incremental approach” to implementing Section 1071, similar to the phased expansion of reporting requirements under the Home Mortgage Disclosure Act (HMDA). The most significant changes include:
Narrower Coverage of Financial Institutions and Credit Products
The 2026 Final Rule substantially reduces the number of institutions subject to Section 1071 reporting requirements. Most notably, the CFPB increased the coverage threshold from 100 to 1,000 covered small-business loan originations annually. As a result, many community banks and other smaller lenders that would have been covered under the 2023 rule are expected to fall outside the scope of the revised rule.
The CFPB also narrowed coverage for certain credit products and transactions that were previously reportable, further reducing the number of loans subject to data collection and reporting requirements.
Updated Definition of “Small Business”
The CFPB revised the definition of a “small business” by lowering the gross annual revenue threshold from $5 million to $1 million. This change significantly reduces the number of businesses whose credit applications will be subject to Section 1071 reporting requirements.
For covered institutions, the revised definition is expected to decrease the volume of reportable applications and originated loans. Combined with the higher institutional coverage threshold, the change substantially narrows the overall scope of the rule compared to the 2023 version.
Reduced Data Collection Requirements
The Bureau also reduced the number of required data points, focusing primarily on information expressly required by the Section 1071 statute. Numerous discretionary data fields included in the 2023 rule have been eliminated, easing compliance burdens and reducing the operational complexity associated with data collection, monitoring, and reporting.
Extended Compliance Timeline
Although the rule becomes effective on June 30, 2026, mandatory compliance will not begin until January 1, 2028. The extended implementation period provides institutions with additional time to evaluate their reporting obligations, assess system capabilities, and implement any necessary operational changes.
Key Takeaways
The revised coverage criteria represent a significant shift from the original rule and may exempt many community banks that previously expected to be subject to Section 1071 reporting requirements. Institutions should carefully review the revised thresholds and definitions to determine whether they remain covered under the 2026 Final Rule.
For institutions that continue to meet the coverage requirements, the additional implementation time should be used to assess data collection processes, lending systems, reporting capabilities, and fair lending compliance programs to ensure readiness before the January 1, 2028, compliance date.
Institutions should continue to monitor developments related to Section 1071. As of this writing, several federal court challenges to the original 2023 rule remain pending, although those cases are expected to be resolved once the final rule takes effect. Nevertheless, future litigation by trade associations or other opponents of the final rule could further alter compliance obligations or implementation timelines. Similar developments occurred during the prior Trump administration, when a federal court invalidated amendments to HMDA reporting thresholds, resulting in additional regulatory uncertainty and compliance adjustments.
Steve H. Powell & Company will continue to monitor developments related to Section 1071 and provide updates as additional guidance becomes available.
Click the link below to find the final rule:
Federal Register: Small Business Lending Under the Equal Credit Opportunity Act (Regulation B)
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