WASHINGTON (Reuters) -The U.S. Consumer Financial Protection Bureau (CFPB) on Wednesday proposed new requirements for financial institutions to collect and report data on small businesses’ access to credit in a bid to boost transparency and fair lending.
The proposed rule would require financial institutions report the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered, the consumer watchdog said in a statement.
“We don’t know enough about whether small businesses have fair access to the capital they need to generate new jobs and grow the American economy,” CFPB Acting Director Dave Uejio said on Wednesday.
The coronavirus pandemic underscored the challenges for U.S. small businesses during a crisis. The vast majority of American small businesses took a hit to their revenue last year, with minority-owned businesses struggling the most and worrying more about accessing credit, a Federal Reserve survey https://www.reuters.com/business/most-us-small-businesses-took-sales-hit-due-pandemic-fed-survey-finds-2021-02-03 released earlier this year showed.
The requirements are a long-awaited part of the broader Wall Street reforms in the wake of the 2008 financial crisis. They would apply to a wide range of products, including term loans, lines of credit, credit cards and merchant cash advances, the CFPB said.
The proposed plan will be open to public comment for 90 days before the agency finalizes the rule. While business owners are not required to provide demographic information, lenders will have to collect and report the data when they do.
Bank and business groups warned the new requirements could become burdensome for lenders.
“A complicated final rule would make it more difficult for small business to access credit,” said Bill Hulse, vice president of the U.S. Chamber Center for Capital Markets Competitiveness.
(Reporting by Chris Prentice and Pete Schroeder; Editing by David Gregorio and Jonathan Oatis)
