US Consumer Watchdog Lays Down Rules On Small Business Loan Data

The U.S. government agency for consumer financial protection, Consumer Financial Protection Bureau (CFPB), has finalized a rule regarding data collection on loans to small businesses.
The CFPB said the rule will increase transparency in small business lending, promote economic development, and combat unlawful discrimination.
According to the rule, lenders are required to collect and report information about the small business credit applications they receive, including geographic and demographic data, lending decisions, and the price of credit.
The country's 33 million small businesses employ nearly half of all private sector workers in the U.S. and account for the majority of new job creation.
Operators of small and local businesses finance their enterprises through loans from banks, credit unions, and nonbank finance companies.
So, the data on small business lending will give investors and lenders more insights to identify new opportunities that support economic growth and help policymakers measure the outcomes of government initiatives.
CFPB explained that the pandemic-era Paycheck Protection Program would have benefited from the kind of small business lending data from the new rule and could have led to more effective lending during the COVID-19 pandemic.
In 2010, Congress enacted requirements resulting in lenders making data available to the public about their small business lending activity.
However, the CFPB did not issue rules to implement this requirement which has now been rectified.
"This small business loan census will give the public key data on this market to ensure that banks and nonbanks are serving small businesses fairly," said CFPB director Rohit Chopra.
Photo via Wikimedia Commons

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