The CFPB’s Section 1071 Proposal: Big Reduction in Reporters, Loans and Data Points
Does Drastic Reduction in Reporters and Loans Undermine Purpose?
The CFPB’s proposal to modify the Section 1071 Rule offers significant reporting relief (and some complications) in several ways: (1) the change in the definition of “small business”, (2) change in treatment of renewals, (3) the change in volume threshold that triggers a covered institution, (4) a dramatic reduction in the fields to be reported, (5) the elimination of agricultural loans, and (6) the elimination of several types of institutions.
The definition of a “smaller business”
In the current definition of the 2023 Rule a small business is any borrower that has $5 million or less gross annual revenue. The Agency is proposing to modify that limitation to reduce the GAR threshold to $1 million or less, consistent with the current GAR definition used for CRA purposes. This change will have a dramatic effect on the volume of reported small business lending. The 2024 CRA A&D data published by the FFIEC on November 14, 2025, revealed there were 8,734,262 small business loans (as defined in the current CRA) originated during 2024. Of that volume, only 4,700,002 loans (53.4%) were classified as extended to businesses with $1 million or less gross annual revenue. In other words, nearly half (4,034,260) of the small business loans reported under CRA would not be included in the Section 1071 data.
Partially offsetting the projected reduction of small business lending activity would be loans of more than $1 million extended to small businesses that are not included in the CRA-reported data. That volume however is likely to be very small since the ability to repay loans is normally directly related to GAR. Larger loans mean larger gross annual revenues. Consequently, the proposed change in small business definition is likely to have a very large net reduction in reported small business lending.
Treatment of renewals under the proposed modifications to the rule.
The Bureau is proposing to eliminate “renewals” except when a renewal involves an increase in the credit extended. This is in contrast to the recognition of renewals as defined in the CRA regulations which do recognize “renewals” when the maturity of the underlying note is changed. This will reduce the reported small business lending activity reported under Section 1071 compared to CRA.
Change in volume trigger for covered financial institutions will have draconian impact
The current Section 1071 threshold for qualified reporters is 100 or more covered originations in the 2 previous calendar years. The proposed change would increase that threshold to 1,000 qualified originations in each of the two previous calendar years. A review of the disclosure data in the 2024 CRA Aggregate & Disclosure data shows that only 80 banks reported 1,000 or more small business loan originations during 2024. Moreover, of those 80 lenders 10 accounted for more than 91% of all lending to “smaller businesses”. In comparison, the CRA regulations cover about 4,300 lenders of which about 700 report their annual CRA lending activity. Therefore, the proposed reporting threshold of 1,000 qualified originations in the two previous calendar years will have a draconian impact on not just the volume of lending reported, but also the number of lenders reporting that activity.
Substantial Change in the fields to be reported
The proposed change to the 2023 Section 1071 Rule includes the elimination of “discretionary “data fields. One of the big complaints from banks in response to the 2023 Rule was the inclusion of about 80 “data points” including pricing, denial reasons, detailed sex/gender data, etc. The Bureau is now proposing that all those fields be paired down to the fields required by statute. Data points to be removed include application method, application recipient, denial reasons, pricing information, interest rate, total origination charges, Broker fees, number of workers, “disaggregated data”, etc. In short, the Bureau is proposing substantial relief in terms of data points.
Elimination of agricultural loans
The CFPB has proposed eliminating agricultural loans for Section 1071 purposes. The Bureau explains that there are unique characteristics of agricultural loans that contrast strongly with the considerations of commercial business loans and therefore the Bureau concludes that including agricultural loans in the Section 1071 data would not be appropriate.
Elimination of certain types of lenders from coverage
The CFPB proposes elimination of Farm Credit System lenders from covered lenders. This is consistent with the Bureau’s intention to eliminate agricultural loans from covered loans.
Commencement Date
Rather than phase in collecting the loan data by reporters in three “tiers”, the proposed Rule changes the effective date to January 1, 2028 for all covered reporters.
The foregoing is a brief overview of some of the more salient changes in Section 1071 proposed by the Bureau. The substantial reduction in covered reporters and covered loans may prompt some to call into question the effectiveness of the proposed Rule changes on achieving the statutory purposes of the Rule.
The public comment period ends December 15.
