AFSA Submits Comment Letter regarding Small Business Lending Data Collection
On January 6, AFSA submitted a comment letter to the Consumer Financial Protection Bureau (CFPB) regarding its Small Business Lending Data Collection Rule (the Rule). The Rule implements Section 1071 of the Dodd Frank Wall Street Reform and Consumer Protection Act, which directs the CFPB to collect data from creditors regarding credit extended to small businesses.
The Rule is unusual in many respects, but most striking is the Rule’s requirement for creditors to ask small business credit applicants for demographic information about the sex, race, and ethnicity of the principal owner(s) of the applicant for credit. For creditors that offer business credit, the requirement to ask such questions and collect responses is contrary to normal business processes that focus exclusively on quantitative metrics rather than personal characteristics. Also, the CFPB plans to publish information it gathers about extensions of credit to small businesses, which has the potential to push confusing and misleading information about business credit markets into the public.
Over the past few months, AFSA staff and representatives from member companies have worked to refine the association’s comment letter. Now that the comment period for the Rule is closing, AFSA will continue to seek opportunities to engage with the CFPB and other policymakers to share creditors’ perspectives on the challenges presented by the Rule.
January 6th, 2022 by Dan Bucherer