For Immediate Release:
May 7, 2026
Contact:
Robert Mayo | hello@woodstockinst.org
New Small Business Lending Rule Undermines Transparency
The final Section 1071 rule issued by the CFPB Friday drastically narrows small business lending data reporting requirements, delays compliance reporting until 2029—nearly two decades after the law was passed—and undermines the statutory goal of publicly disclosing demographic lending data to better understand the small business lending market and identify potential disparities, gaps, and opportunities.
Passed as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1071 requires lenders to disclose the demographic data of their small business borrowers. The new revised rule issued by the Trump Administration represents the latest effort to finalize implementation after 16 years of delay, but it severely restricts the entities and types of loans covered by the data reporting requirement.
The new rule exempts 90% of financial institutions previously covered under the 2023 rule from reporting by raising the coverage threshold from 100 to 1,000 loan originations. It also redefines a small business as under $1 million gross annual revenue rather than $5 million, reducing the number of covered borrowers and excluding a significant portion of small businesses seeking access to capital.
The rule also weakens the data by removing the collection of critical demographic data and cutting out agricultural lending, credit transactions of $1,000 or less that many microbusinesses rely on, and merchant cash advance products (MCAs). The growth of the MCA industry in the small business credit market has accelerated aggressively in recent years, reaching nearly $20 billion in 2025, and MCAs have been linked to a growing number of small business bankruptcies.
“The final rule is a giveaway to the financial industry at the expense of small business owners across the country,” said Woodstock President & CEO Horacio Mendez. “The repeated exclusions and exemptions directly go against both the letter and spirit of the law as a tool for identifying discrimination and other lending gaps in the small business lending market. The Congressional intent of Section 1071 is to provide a holistic picture of this market—this final rule does nothing to accomplish that.”
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Woodstock Institute is a leading policy and research nonprofit that advocates for consumer financial protection and community economic development. Our work seeks to combat structural inequities and improve the quality of life in lower-income neighborhoods and communities of color. Among our areas of focus are predatory lending, access to banking, debt collection, and municipal fines and fees.
