WASHINGTON— The CFPB on Thursday finalized a rewrite of its small business lending data rule that strips out a Biden-era requirement for FIs to collect demographic information from borrowers, according to a Federal Register notice.
Reuters reported the move replaces key elements of the 2023 Section 1071 rule and marks the Trump Administration’s latest rollback of regulations aimed at identifying potential lending bias.
Reuters said the original rule, finalized under the Biden Administration after years of delay, required lenders making small business loans to collect data on how business owners identified their race, gender, ethnicity and sexual orientation. The requirement stemmed from a Dodd-Frank mandate adopted after the 2008 financial crisis, but had faced prolonged legal and political challenges.
Industry groups and conservative critics had argued the Biden-era rule went beyond what Congress intended and imposed an intrusive compliance burden that could discourage small business lending, Reuters reported. Banks sued to block the rule, and those court fights helped push implementation into the Trump Administration, which then moved to scale it back.
The final action is the latest sign the CFPB under President Trump is narrowing fair lending and data collection requirements put in place by the prior administration, with Reuters noting the revised rule removes one of the most controversial features for banks and other lenders.
CU Trade Groups Respond
“Credit unions are aligned with the goals of Section 1071 to ensure small business lending is meeting community development needs and is accessible to all lenders, particularly those owned by women and minorities," stated America's Credit Unions President/CEO Scott Simpson. "These goals are woven into the credit union mission. But as we often see, the original rulemaking was significantly burdensome and would have had an adverse effect on small business lending. We appreciate the bureau reconsidering this rule, listening to credit unions, and providing meaningful relief.”
The Defense Credit Union Council welcomed the CFPB's effort to revisit and recalibrate its small business lending data collection rule, while recognizing that significant questions remain for credit unions serving military communities.
"As reported, the CFPB’s finalized rule replaces the prior framework that required extensive demographic data collection—including race, gender, and other sensitive information—on small business borrowers and reflects a broader effort to scale back requirements that many lenders viewed as overly complex and burdensome," noted DCUC Chief Advocacy Officer Jason Stverak. "From DCUC’s perspective, transparency and fair lending must always remain core priorities. However, regulation must be carefully balanced against operational realities—particularly for credit unions serving servicemembers, veterans, and small businesses on or near military installations. Overly prescriptive data mandates risk diverting resources away from lending and member service, ultimately harming the very communities policymakers aim to support.
"We have consistently raised concerns with the CFPB about the scope, cost, and privacy implications of Section 1071 implementation. The original rule expanded well beyond statutory intent, dramatically increasing required data fields and compliance burdens for financial institutions. DCUC has urged regulators to adopt a more tailored approach that reflects the cooperative model and mission of credit unions," continued Stverak. "At the same time, any revised framework must provide clarity, consistency, and sufficient implementation time. Ongoing regulatory uncertainty combined with shifting requirements creates operational risk and complicates long-term planning for credit unions of all sizes."
Stverak added that credit unions stand ready to support responsible small business lending and financial inclusion.
"But that mission is best advanced through smart, tailored regulation—not excessive complexity that limits the ability to serve those who have served our country," he said.