U.S. Reps. French Hill (R-AR), Blaine Luetkemeyer (R-MO), and Roger Williams (R-TX) introduced a bill that seeks to exempt certain financial institutions and transactions from the Consumer Financial Protection Bureau’s (CFPB) proposed reporting requirements with respect to data about small business credit applications.
The proposed CFPB rule states that the requirements apply only to financial institutions that originate at least 25 annual credit transactions to small businesses in each of the preceding two years. The rule further defines small businesses as those with annual revenue of $5 million or less.
The Small Lender Act would codify “financial institution” as one that originates at least 500 covered transactions in each of the last two years, as opposed to the 25-transaction threshold proposed by the CFPB. The bill would also codify “small business” as one with gross annual revenues of $1 million or less in the last year instead of $5 million or less as defined in the CFPB’s proposed rule. Finally, the bill extends the effective compliance date with the final rule to be three years after publication in the Federal Register plus a two-year grace period, as opposed to the 18-month implementation period in the proposed rule.
“Small businesses are the backbone of our economy across America. With small lenders often spearheading investment in their local communities, it is critical that small businesses have access to the capital they need to flourish. The Consumer Financial Protection Bureau’s (CFPB) proposed regulation hurts small businesses by making credit more costly and imposes significant compliance costs that disproportionately impact smaller companies,” Hill, Luetkemeyer, and Williams said.
This bill has been endorsed by the Credit Union National Association, First Security Bank, Independent Community Bankers Association, Farmers & Merchants Bank, and Arkansas Bankers Association.
“Together, we are proud to introduce the Small LENDER Act, which would provide regulatory relief to community banks and other small lenders. Small businesses should not be subjected to the same compliance parameters as large businesses. Our bill makes essential changes to exempt smaller banks and other lenders from having to comply with the CFPB small business data collection regulation in the absence of Congress repealing Section 1071 of Dodd-Frank,” the lawmakers said.