- The US government agency for consumer financial protection, Consumer Financial Protection Agency (CFPB), has a Rule regarding data collection on small business loans.
- The CFPB said the rule will increase transparency in lending to small businesses, promote economic development and fight unlawful discrimination.
- Under the rule, lenders are required to collect and report information about the small business loan applications they receive, including geographic and demographic data, loan decisions, and loan prices.
- The nation’s 33 million small businesses employ nearly half of all private sector workers in the US and are responsible for the bulk of new job creation.
- Small and local business operators finance their businesses through loans from banks, credit unions, and non-bank financial firms.
- So, small business lending data will give investors and lenders more insight to identify new opportunities that support economic growth and help policymakers measure the results of government initiatives.
- CFPB said the pandemic-era paycheck protection program would have benefited from the nature of small business lending data from the new rule and could have led to more effective lending during the COVID-19 pandemic.
- In 2010, Congress enacted requirements that resulted in lenders making data available to the public about their small business lending activities.
- However, the CFPB did not issue any rules to implement this requirement, which has now been rectified.
- “This small business credit census will provide the public with key data on this market to ensure banks and non-banks are serving small businesses fairly,” said CFPB Director Rohit Chopra.
- Photo via Wikimedia Commons
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