CFPB Issues Interim Final Rule for Section 1071 Small Business Lending Data Collection
By Scott Birrenkott
On June 18, 2025, the Consumer Financial Protection Bureau (CFPB) issued an interim final rule (IFR) amending the compliance deadlines for its Section 1071 small business lending data collection rule (1071). This latest development marks yet another chapter in the long and complex implementation process of Section 1071, which was first introduced under the Dodd-Frank Act more than a decade ago.
Because Section 1071 was enacted by Congress as part of the Dodd-Frank Act, CFPB is statutorily required to implement the provision through rulemaking. The 1071 rule is designed to increase transparency in small business lending by requiring financial institutions to collect and report data on credit applications from small businesses, including demographic information about the principal owners. The goal is to facilitate enforcement of fair lending laws and enable better policymaking. However, it also presents significant operational changes given the impact collection and reporting has on the business of lending.
Initially finalized in March 2023, the rule’s implementation was quickly met with legal challenges. In particular, the American Bankers Association and Texas Bankers Association filed suit in federal court, resulting in a preliminary injunction issued in July 2023. That injunction paused enforcement of the rule for the plaintiffs in the case and was later extended nationwide while the U.S. Supreme Court considered the constitutionality of the CFPB’s funding structure in a separate case. That constitutional question was resolved in CFPB’s favor in May 2025, clearing the way for 1071 to move forward.
The newly issued IFR responds to the delay caused by the litigation. It provides a revised set of tiered compliance dates, offering additional time for lenders depending on their volume of covered originations. While the Bureau largely maintained the original structure of its implementation timeline, each compliance tier has been pushed back to account for the injunction period.
Notably, the IFR does not address other stakeholder concerns raised during the comment process or litigation. CFPB has indicated that it expects lenders to begin preparing for compliance based on the revised dates and existing rule framework. Still, the legal battle may not be over. On July 25, 2025, a coalition of community advocacy groups filed a new lawsuit seeking to force the CFPB to implement the rule more quickly, citing harm to small businesses from the continued delay. The outcome of this latest suit remains to be seen.
Most recently, on August 1, 2025, the CFPB filed a status report with the Fifth Circuit Court of Appeals in the pending litigation (Texas Bankers Association v. CFPB) outlining further steps the agency is taking. CFPB confirmed that its new leadership has formally directed staff to initiate a new Section 1071 rulemaking, signaling that changes to the 2023 rule may be on the horizon. Thus, the IFR extension creates somewhat of a limbo, where the industry is still waiting to see what action CFPB will take with respect to 1071. Given the change in the Administration, the litigation status, news and expectations of a new proposed Section 1071 rule, WBA’s recommendation at time of publication of this article is that banks should take a temporary pause pending forthcoming rulemaking.
For more specific details on the new timelines see the June 2025 WBA Compliance Journal.
Birrenkott is the WBA director – legal
