On November 13, 2025, the CFPB proposed a number of revisions to the "Section 1071" rule implemented by Reg B, Subpart B. These changes affect a number of aspects of the proposed rule from narrowing the scope of who must report to streamlining data collection and modifying demographic data collection.
Overview
The revised proposal issued by the Consumer Financial Protection Bureau (CFPB) regarding Section 1071 reconsiders the scope of the 2023 final rule, suggesting a narrower approach by proposing to exclude certain transaction types, such as merchant cash advances, agricultural lending, and small dollar loans.
Key proposed changes include raising the reporting threshold for covered financial institutions from 100 to 1,000 originated transactions and revising the definition of small business to those with $1 million or less in gross annual revenue. The proposal also recommends removing several discretionary data points and making changes to demographic data collection to comply with the Defending Women E.O., primarily by removing references to LGBTQI+-owned business status and requiring a binary reporting of sex.
Summary of Proposed Revised Rule Regarding Section 1071
The Consumer Financial Protection Bureau (CFPB) has issued a proposed rule introducing substantial revisions to Regulation B, Subpart B, which implements Section 1071 of the Dodd-Frank Act. This proposal reflects a shift toward a more focused, incremental approach to data collection, aiming to streamline the rule, reduce complexity for lenders, and improve data quality.
The original 2023 final rule took an expansive approach, but based on stakeholder feedback and ongoing litigation, the CFPB now believes that starting with more modest requirements focused on core lending products, core lenders, and core data points will better advance the rule's statutory purposes over the long term: facilitating fair lending enforcement and identifying business and community development needs.
Here is a summary of the most significant proposed changes affecting who reports, what transactions are covered, and what data must be collected.
Narrowing the Scope: Who Must Report
The proposed rule significantly narrows the definition of covered financial institutions and transactions:
- Higher Origination Threshold for Lenders: The rule proposes to increase the threshold for defining a "covered financial institution" from originating 100 covered credit transactions to 1,000 covered credit transactions for small businesses in each of the two preceding calendar years. The intent is to focus initially on larger, core lenders that are better resourced to sustain compliance complexities.
- Exclusion of FCS Lenders: Financial institutions that are Farm Credit System (FCS) lenders are proposed for exclusion from coverage. This is based on their unique mission-driven structure and the fact that they are already subject to an existing, tailored regulatory reporting framework through the Farm Credit Administration (FCA).
- Smaller "Small Business" Definition: The rule proposes reducing the gross annual revenue threshold defining a "small business" from $5 million or less to $1 million or less. The CFPB believes this aligns better with existing financial regulatory requirements, such as certain metrics within Community Reinvestment Act (CRA) regulations.
Excluding Specialized Transactions
The CFPB proposes three new exclusions from the definition of a "covered credit transaction," prioritizing core, widely used lending products (loans, lines of credit, and credit cards).
- Merchant Cash Advances (MCAs): MCAs are proposed for exclusion. The CFPB notes that MCAs are structured differently from traditional lending products (e.g., concepts like "interest rate" do not fit). Furthermore, collecting data on MCAs may not yield comparable information, and many smaller MCA providers may lack the necessary infrastructure for compliance, risking poor data quality.
- Agricultural Lending: Transactions to fund the production of crops, livestock, or the purchase of related capital assets (like farmland or machinery) are proposed for exclusion. Agricultural loans differ markedly from other commercial lending due to unique underwriting challenges (e.g., loans secured by biological assets subject to weather/disease risk), making them difficult to compare.
- Small Dollar Business Credit: Transactions in an amount of $1,000 or less are proposed for exclusion, with the amount subject to future inflation adjustments. The belief is that these very small loans are unlikely to provide meaningful insight for the rule's statutory purposes and requiring reporting could make offering these products uneconomical for lenders.
Streamlining Data Collection: Discretionary Data Points Removed
To reduce complexity and focus efforts on statutory requirements, the CFPB proposes removing five discretionary data points that were included in the 2023 final rule:
- Application method
- Application recipient
- Denial reasons
- The CFPB noted the sensitivity of this information and that lenders already possess denial reasons for internal analysis, and applicants can access them under existing Regulation B rules.
- Pricing information
- The removal addresses concerns about the complexity of collection and the potential risk of harm or incorrect inferences about discrimination if pricing data is published without sufficient context, such as credit scores.
- Number of workers
The Bureau will focus on collecting data points specifically identified in Section 1071 and a limited number of others integral to that collection (like time in business, NAICS code, and number of principal owners).
Demographic Data Modifications (E.O. 14168)
In addition to removing discretionary data points, the proposal introduces changes to demographic data collection to comply with Executive Order 14168 ("Defending Women E.O.").
- Removal of LGBTQI+ Status: The requirement to inquire whether a small business is LGBTQI+-owned is proposed for removal.
- Principal Owner Sex Collection: The collection of a principal owner’s demographic data will shift from using the term "sex/gender" and a free-form text field to inquiring about sex using a static binary response option of male/female. This change is also intended to improve data quality, as free-form text fields were anticipated to inhibit robust data analysis.
- Emphasis on Right to Refuse: The proposed revisions would add a requirement to the regulatory text and the sample form (Appendix E) to specifically emphasize the applicant's right to refuse to provide demographic data.
Compliance Date and Procedures
- Single Compliance Date: The system of tiered compliance dates is proposed for elimination in favor of a single compliance date of January 1, 2028, for all remaining covered financial institutions. This extension allows institutions time to adjust to the numerous changes introduced by this proposed rule.
- Removal of Anti-Discouragement Mandates: The CFPB proposes removing specific provisions that detail requirements to monitor for indicia of discouragement, such as low response rates, which are now viewed as redundant and contributing unnecessary regulatory complexity. Covered financial institutions would still retain the affirmative obligation to maintain procedures reasonably designed to obtain a response from applicants.
The CFPB encourages early submission of comments on the overall approach and the specific proposed revisions, including feedback on the resulting changes in cost, complexity, and data quality.