National CAPACD Applauds the CFPB’s Efforts to Collect Better Data on AA and NHPI Small Businesses Borrowers
Today, the Consumer Financial Protection Bureau (CFPB) released the long-awaited final rule on Section 1071 of the Dodd-Frank Act. The rule will ensure greater fairness and equity in the lending market by requiring small business lenders to collect and report on data related to the race and ethnicity of borrowers, along with other important information on small business credit applications like lending decisions and the price of credit. The demographic requirements are similar to the data standards for the Home Mortgage Disclosure Act (HMDA), which requires collecting aggregated and disaggregated racial data.
“This rule is the product of years of research and engagement. It is a big win for fair lending and equal access to capital for businesses of color,” says Seema Agnani, Executive Director of National CAPACD. “The collection and reporting of data on a borrower’s race, including at the subgroup level, can help us to address systemic discrimination, identify groups that are being underserved, and pinpoint the need for particular products and services. The impacts of the rule will also lead to greater economic growth and opportunities for traditionally under-resourced communities, which increases prosperity for the country as a whole.”
National CAPACD worked with its Entrepreneurs of Color coalition partners, the National Association for Latino Community Asset Builders (NALCAB) and Center for Responsible Lending (CRL), and its membership to submit a joint comment letter with recommendations to ensure strong data collection. We will keep you informed on how Dodd-Frank 1071 is rolled out, including ways to push back on challenges to the rule moving forward.