On May 1, 2026, the Consumer Financial Protection Bureau (CFPB) issued a revised final rule under Section 1071 of the Dodd-Frank Act, amending Regulation B to refine small business lending data collection and reporting requirements.
The rule is intended to streamline compliance, reduce operational complexity, and improve the quality of reported data, while continuing to support fair-lending oversight and transparency in small business credit markets.
The Section 1071 final rule becomes effective on June 30, 2026 (or 60 days after Federal Register publication), with a uniform compliance date of January 1, 2028.
Key Changes in the Final Rule
The CFPB’s revised rule introduces several material changes from the 2023 version to better align compliance expectations with operational feasibility and advance section 1071’s statutory purpose.
Section 1071 2023 Rule vs. Section 1071 2026 Rule
| Criteria | 2023 Rule | 2026 Rule |
| Reporting Threshold | 100 Loans/Year | 1,000 Loans/Year |
| Business Revenue Cap | $5M Green Asset Ratio | $1M Green Asset Ratio |
| Agricultural Loans | Included | Excluded |
| Merchant Cash Advances | Included | Excluded |
| Compliance Dates | Tiered (2026 - 2026) | January 1, 2028 (Universal) |
A deeper dive into these key revisions includes:
- Narrowed scope of covered institutions: The threshold for a “covered financial institution” has been increased to 1,000 covered credit transaction originations annually, significantly reducing the number of impacted lenders. As a result, many institutions that previously assumed they would be subject to the rule may no longer be in scope — though few have validated that assumption using projected origination data.
- Revised small business definition: The rule lowers the gross annual revenue threshold for a small business from $5 million to $1 million or less, focusing reporting on truly small enterprises.
- Reduced data collection burden: The CFPB eliminated certain discretionary and non-statutory data points, simplifying reporting requirements and easing operational strain.
- Simplified compliance timeline: The prior tiered implementation has been replaced with a single compliance date (January 1, 2028) for covered institutions meeting origination thresholds.
- Greater flexibility in data collection: The rule removes prescriptive requirements regarding when and how demographic data must be collected, allowing institutions more flexibility in designing compliant processes.
Despite these revisions, the rule maintains the core statutory requirement that financial institutions collect and report data on small business credit applications, including information related to minority-, women- and small-business ownership.
CFPB released an “Unofficial Redline of the Small Business Lending Reconsideration Final Rule” to view the exact changes.
The Final Rule’s Impact on Financial Institutions
While the revised Section 1071 rule represents a meaningful recalibration of compliance expectations, it does not eliminate the need for covered financial institutions, including banks, credit unions and trade associations, to prepare for significant operational, regulatory and strategic considerations.
| Institution Size (Proxy by Assets) | Coverage Under Rule | Direct Compliance Impact | Operational/Strategic Impact |
| Small Community Institutions (<$1B) | Generally exempt due to low-volume small business lending (<1,000 originations) | No data collection/reporting required | Significant regulatory relief; avoids tech investment and staffing burdens |
| Regional & Intermediate Institutions ($1B–$9B) | Conditional coverage depending on whether ≥1,000 loans annually | Only covered lenders must collect/report a reduced dataset on small business applications | Incentive to manage origination volume; potential competitive advantage if below threshold |
| Large Regional Institutions ($10B–$50B) | Likely covered institutions due to exceeding 1,000-loan threshold | Must collect, maintain and report small-business lending data (streamlined vs. 2023 rule) | Investment in data systems, governance and fair lending analytics; moderate compliance burden |
| National Institutions (>$50B) | Fully covered | Full compliance with data collection and reporting regime, albeit reduced data points vs. prior rule | Ongoing regulatory scrutiny, integration into fair lending and ESG reporting frameworks |
Reduced, But Still Substantial, Compliance Burden
The higher coverage threshold and reduced dataset are expected to exclude smaller lenders and ease reporting obligations for others. However, covered institutions must still build infrastructure to collect, validate and report detailed loan-level data, similar in complexity to Home Mortgage Disclosure Act (HMDA) reporting.
Expansion of Fair Lending Scrutiny
Section 1071 data will enhance regulators’ ability to identify potential disparate treatment or impact in business lending, extending fair lending risk beyond traditional consumer products.
Enterprise-wide Operational Implications
Implementation will affect multiple functions, not just compliance teams. Most institutions should expect involvement across:
- Front-line lending and application intake
- Compliance management systems (CMS)
- Data governance, quality and reporting infrastructure
- Training, policies and procedures
These changes may require technology upgrades, process redesign and enhanced internal controls early on.
Strategic Implications for Product Offerings
Given expanded transparency into lending patterns, institutions may need to reassess underwriting, pricing, and distribution strategies to mitigate reputational and regulatory risk.
Looking Ahead: What Financial Institutions Should Do Now
The CFPB’s revised Section 1071 rule reflects a compromise between regulatory transparency objectives and industry concerns regarding burden and feasibility. While the final rule narrows the scope and simplifies implementation, it preserves the foundational shift toward comprehensive transparency in small business lending data.
As the compliance deadline approaches, institutions should expect:
- Increased regulatory scrutiny of small business lending practices
- Heightened enforcement risk tied to fair lending and data accuracy
- Continued evolution in supervisory expectations as the CFPB aggregates and analyzes reported data
Proactive preparation will be essential for institutions to manage compliance effectively, mitigate risk and leverage data strategically in a more transparent lending environment. With a firm compliance date established, financial institutions should begin planning now, taking the steps below to ensure readiness.
Section 1071 Compliance Date Examples
| Financial Institution | Covered Transactions per Year | Compliance Date* | |||
|---|---|---|---|---|---|
| 2026 | 2027 | 2028 | 2029 | ||
| A | 3,000 | 3,000 | January 1, 2028 | ||
| D | 990 | 1020 | 990 | 990 | Not required to comply in 2029 or 2030 |
| F | 990 | 1020 | 1020 | 1020 | Required to comply January 1, 2029 |
*Note: special transition rules for financial institutions that did not collect gross annual revenue or other information that would allow them to determine the small business status of the businesses for whom it originated covered credit transactions in 2026 and 2027.
1. Evaluate Coverage Status:
Assess whether the institution meets the 1,000-loan origination threshold based on projected 2026 – 2027 activity.
2. Conduct a Gap Analysis:
- Compare current data collection capabilities and processes against revised requirements.
- Identify gaps in systems, controls and governance frameworks.
3. Develop a Data Strategy:
- Establish processes for accurate, consistent and secure data capture.
- Address privacy and data-use considerations, particularly for demographic information.
4. Enhance Compliance and Risk Management:
- Integrate Section 1071 into fair lending monitoring, testing and reporting frameworks
- Update policies, procedures and internal audit programs.
5. Invest in Technology and Training:
- Implement or upgrade systems to support loan application tracking, geocoding and regulatory reporting.
- Train lending and compliance teams on new requirements and expectations.
Institutions that begin planning early will have greater flexibility in shaping compliant, sustainable processes aligned with their business model. Conversely, those that delay may find themselves constrained by system limitations, data gaps or training challenges as the compliance deadline approaches.
Your Guide Forward
For more information on how the Section 1071 final rule may impact your institution, Cherry Bekaert’s dedicated Financial Institution advisors are available to help answer any questions about these changes, assess coverage, prepare for compliance and manage fair lending risk. Our team brings deep industry insight and technical experience to help you navigate the evolving regulatory landscape with confidence.
