Consumer Financial Protection Bureau Releases Request for Information Regarding Small Business Lending Market
May 15, 2017
The Consumer Financial Protection Bureau (CFPB) released a request to collect information regarding the small business financing market. This request encompasses information about the products offered to small businesses, including women-owned and minority-owned small businesses, as well as the financial institutions that offer such credit.
With the request, the CFPB aims to enhance its understanding of the small business lending industry. Section 1071 of the Dodd-Frank Act requires financial institutions to compile, maintain, and report information about their applications for loans from small businesses in accordance with regulations issued by the bureau. The RFI is the bureau’s first step toward crafting a rule for the collection and reporting of this lending data.
Following are a few of the topics the CFPB is exploring:
- What defines a small business: Despite the pivotal role small businesses play in the U.S. economy, the definition of a small business varies widely. Some definitions are based on the number of employees or annual receipts. The bureau seeks to learn more about how small businesses are defined by lenders and how that affects their credit application processes. From responses to the request for information, the bureau aims to work toward a practical definition.
- What institutions lend to small businesses and what products are offered: The CFPB wants to know more about where small businesses turn for financing and the various products they choose. The bureau is also looking into the roles of lending marketplaces, brokers, dealers, and other third parties in the small business lending application process.
- What types of business lending information are used by financial institutions: The bureau aims to understand more about the business lending information used, maintained, and reported by financial institutions. This includes what types of data are collected from small business borrowers, and when this data is collected during the application process. The bureau is exploring how best to implement a reporting requirement for this information that will meet the objectives of Section 1071 while minimizing the burden on financial institutions.
- Privacy impact of the public release of small business lending data: Some data involves sensitive, private, or confidential information. The CFPB is exploring how to protect the privacy of loan applicants and borrowers, as well as the confidentiality interests of financial institutions, in this process. The request for information provides an opportunity for the public to discuss ways the information can be shared as required by statute while appeasing privacy and confidentiality concerns.
The CFPB is requesting comments from individual businesses, consumer groups, community development organizations, bank and nonbank lenders, regulators, and all other interested parties. The comment period for the public inquiry will end 60 days after the request for information is officially published in the Federal Register.
Compliance Question of the Week
Does the information obtained during account opening to satisfy the CIP process have to be retained even when the information has changed, such as the member’s address?
Yes, credit unions must maintain the identifying information used during the account opening process for five years after the date the account is closed. Even if you update the member’s address, you are still required to retain the original documents that verified the member’s address at account opening.
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Posted in Compliance News.