Sponsors (17)
Official title: To amend the Equal Credit Opportunity Act to provide for an effective date and a temporary safe harbor for compliance with certain small business lending data collection rules, and for other purposes.
Introduced February 4, 2025 by French Hill · Last progress February 4, 2025
The bill increases transparency and limits biased data collection while easing near‑term burdens on community lenders, but it narrows who is covered, may produce incomplete demographic data, and imposes compliance costs on large institutions, reducing the overall effectiveness of discrimination detection.
Small‑business loan applicants will receive a one‑page, plain‑English notice that demographic questions are voluntary and won’t affect credit decisions, giving applicants clearer notice and choice.
Lenders are prohibited from recording applicant demographics based on visual observation or other non‑applicant sources, reducing the risk of inaccurate profiling and misclassification.
Community banks and smaller lenders (those originating fewer than 2,500 small‑business loans per year or with under $10B in assets) are exempted, meaning reduced compliance burden for many local institutions.
Large financial institutions required to comply will incur new costs to produce forms, collect, maintain, and report demographic data.
Defining 'small business' by a $1,000,000 revenue threshold narrows coverage compared with broader definitions and may exclude many small firms from protections and reporting analyses.
Some small‑business applicants may still decline to provide demographic data despite the protections, limiting the completeness and usefulness of the data for detecting discrimination.
Based on analysis of 2 sections of legislative text.
Delays and narrows CFPB small‑business applicant demographic reporting, exempts smaller lenders, requires a one‑page model notice, bans visual‑observation data, and defines small business as ≤ $1M revenue.
Limits and delays new small‑business lending demographic data collection requirements and exempts smaller lenders. It requires the CFPB to provide a one‑page plain‑English model notice for applicants, bans collecting applicant demographics by visual observation, sets an initial compliance date (no requirement before June 1, 2031) with a two‑year non‑enforcement safe harbor, and defines eligible small businesses as those with $1,000,000 or less in annual revenue. Lenders that originated fewer than 2,500 small‑business credit transactions in each of the prior two years or have under $10 billion in assets are exempt from the reporting rule.