© Reuters. FILE PHOTO: The seal of the Consumer Financial Protection Bureau (CFPB) is seen at their headquarters in Washington, D.C., U.S., May 14, 2021. REUTERS/Andrew Kelly
(Reuters) – The top U.S. government agency for consumer financial protection on Thursday unveiled a long-awaited final rule for data collection on loans to small business, saying it would help combat discrimination and promote investment.
The banks, credit unions and savings associations as well as non-bank lenders who serve the estimated 33 million small businesses nationwide will be required to collect demographic and geographic data and report this along with lending decisions and the price of credit, according to the Consumer Financial Protection Bureau.
In a statement, CFPB Director Rohit Chopra said many small businesses failed during the COVID-19 pandemic because they struggled to access credit under the Paycheck Protection Program.
“This small business loan census will give the public key data on this market to ensure that banks and non-banks are serving small businesses fairly,” he said.
The legal mandate for the rule is as old as the CFPB itself, having been created under the 2010 Dodd-Frank Wall Street reform legislation in the wake of the global financial crisis. It is among the last rules the agency will issue as a result of Dodd-Frank.
In 2019, the California Reinvestment Coalition sued the administration of President Donald Trump to compel the CFPB to complete the rulemaking process, resulting in a court order requiring the agency to issue a final rule by the last day of March 2023.
Under the rule, the CFPB will publish the collected data while working to preserve loan applicants’ privacy, officials said.