The CFPB has finalized a substantially narrowed version of its Section 1071 small business lending data collection rule. The final version includes many credit union-sought changes to reduce regulatory burdens while still enabling credit unions to serve their members effectively.

The final rule:

• Raises the definition of a covered financial institution to 1,000 covered transactions (up from 100);
• Reduces the gross annual revenue threshold for a "small business" to $1 million or less (down from $5 million);
• Removes discretionary data points that were included in the 2023 final rule to streamline data collection, reduce operational burdens, and simplify discussions with applicants;
• Replaces the tiered compliance schedule with a single compliance date of Jan. 1, 2028, for all covered financial institutions that originated at least 1,000 covered transactions for small businesses in each of calendar years 2026 and 2027; and
• Eliminates several non-statutory requirements that previously dictated exactly when and how lenders had to collect applicant-provided demographic and ownership data.

The CFPB issued the revised proposal late last year, following the CFPB's 2023 final rule and subsequent court challenges.