Section 1071 of the Dodd-Frank Act
What It Is
Section 1071 of the Dodd-Frank Act expands data collection requirements for financial institutions in the small business lending market. As banks prepare to implement the CFPB’s recently defined scope and requirements of the regulation, the complexities of collecting and reporting credit application data on woman-, minority-owned, and LGBTQI+ small businesses under Section 1071 cannot be overstated due to the nature of small business lending and the ways these applications are processed.
Why It Matters
When implemented thoughtfully and in partnership with key stakeholders, collecting more data on small business lending has great potential to advance the goal banks and the CFPB of share of financing the American Dream and expanding access to credit in underserved communities. However, there is also an increased risk of collecting misleading or incomplete data that could negatively impact small businesses and stifle small business lending.