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SMALL BUSINESS LENDING : UNDERSTANDING THE IMPACTS OF THE REGULATION B FINAL RULE ON SMALL BUSINESS DATA COLLECTION
COMPLIANCE DATES
The CFPB chose a phased-in application of the final rule , requiring large lenders to collect and report data sooner than small lenders . To determine when it must begin complying with the final rule , a financial institution must determine which compliance date tier applies to it . Generally , the compliance date tiers in the final rule differ depending on the number of covered originations a financial institution originated in 2022 and 2023 . Only covered financial institution are required to comply with the final rule in any given year .
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OCT . 1 , 2024
A financial institution must begin collecting data and comply with the final rule on Oct . 1 , 2024 , if it originated at least 2,500 covered originations in both 2022 and 2023 .
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APRIL 1 , 2025
A financial institution must begin collecting data and comply with the final rule on April 1 , 2025 , if it :
• Originated at least 500 covered originations in both 2022 and 2023 ;
• Did not originate 2,500 or more covered originations in both 2022 and 2023 ; and
• Originated at least 100 covered originations in 2024 .
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JAN . 1 , 2026
A financial institution must begin collecting data and comply with the final rule on Jan . 1 , 2026 , if it originated at least 100 covered originations in both 2024 and 2025 .
Some financial institutions may not be able to readily determine if transactions originated in 2022 or early 2023 are covered originations because they don ’ t know if a borrower is a small business as defined in the final rule . The final rule includes a transitional provision financial institutions may use to determine the number of covered originations they completed in 2022 and 2023 , if it did not collect sufficient information to determine if some , or all borrowers , were small businesses pursuant to the final rule or if such information is not readily accessible . Such institutions may count covered originations for the last quarter of calendar year 2023 ( Oct . 1 through Dec . 31 ), and then annualize the number of its covered originations based on this information . The financial institution could use this annualized number to determine its covered originations for 2022 and 2023 , or both years .
Example
If a financial institution determines it originated 90 covered credit transactions to small businesses between Oct . 1 , 2023 and Dec . 31 , 2023 , they could use 360 as its annualized number of covered originations for 2023 . The financial institution could also use this number for its covered originations for 2022 . They would not be required to begin collecting data or otherwise complying with the final rule before Jan . 1 , 2026 .
Alternatively , the financial institution could assume all of the covered credit transactions it originated in 2022 and 2023 were made to a small business and , thus , are covered originations . If the same financial institution originated 370 covered credit transactions in 2022 , it is not required to begin collecting data or otherwise complying with the final rule before Jan . 1 , 2026 .
Covered financial institutions may begin collecting applicants ’ protected demographic information one year prior to their compliance date to help prepare for coming into compliance with this final rule .
REPORTABLE APPLICATIONS
A covered financial institution is required to collect and report data , and satisfy other requirements for reportable applications . An application is reportable if it is a covered application from a small business .
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