October 28, 2021

Volume XI, Number 301

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October 28, 2021

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October 27, 2021

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October 26, 2021

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October 25, 2021

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CFPB Issues NPRM on Dodd-Frank 1071

Yesterday, the Consumer Financial Protection Bureau (CFPB) issued its long-awaited Notice of Proposed Rulemaking (NPRM) related to Dodd-Frank 1071. As we have discussed in this space, Section 1071 amends the Equal Credit Opportunity Act to mandate certain reporting requirements for financial services companies making business loans. The act aims to “facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.” There is a 90-day period in which stakeholders can submit comments to the CFPB regarding the proposed rule.

In particular, the Bureau is proposing to add a new Subpart B to Regulation B that will implement 1071’s requirements. Although many provisions of the proposed rule are consistent with the SBREFA outline that was issued last September – for instance, the scope of data collection remains limited to “small businesses” and does not include women-owned and minority-owned businesses that are not small – the Bureau did elect to increase the scope of the rule in some areas. Also, the Bureau limited the number of exempt entities and products, electing to not implement an asset-based exemption for depository institutions and also elected to include Merchant Cash Advances. The limited exemptions are a departure from the anticipated scope of 1071 discussed in the SBREFA outline. The proposed rule also answers some important lingering questions, including the definition of “small business,” which is defined by the rule as a business whose gross annual revenue is $5 million or less for its preceding fiscal year.

In sum, Dodd-Frank 1071 will pose substantial compliance and regulatory burdens on financial services companies offering credit to small businesses. Accordingly, it is critical that institutions understand the contours of the new rule as part of the compliance process.

© 2021 Bradley Arant Boult Cummings LLPNational Law Review, Volume XI, Number 245
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About this Author

Christopher Friedman Nashville Lawyer Bradley Arant Boult Cummings Law Firm
Associate

Chris Friedman is a regulatory compliance attorney and litigator who focuses on helping consumer finance companies and small business lenders, as well as banks, fintech companies, and other participants in the financial services industry, address the challenges of operating in a highly regulated sector. Chris focuses on both small business lenders and alternative business finance products and has helped non-bank small business lenders, banks who make small business loans, commercial credit counselors, lead generators, and others in the industry. He helps clients launch new products,...

615-252-3504
Brian Epling Corporate Compliance Lawyer Bradley Arant Boult Cummings LLP
Associate

Brian Epling assists financial services clients, including small-dollar lenders, auto finance companies, and mortgage servicers, with navigating regulatory compliance and litigation issues.

On the regulatory compliance side, Brian has assisted financial services clients with policies and procedures to comply with state and federal law and investor requirements. With respect to litigation, practicing in both Tennessee and Kentucky, Brian has successfully argued dispositive motions and appeals involving alleged violations of the Truth in Lending Act, Real Estate Procedures Act, and...

615-252-2340
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