CFPB holds small business lending field hearing and issues white paper, RFI

On May 10, the CFPB held a field hearing about small business lending in Los Angeles, California. In conjunction with the field hearing, the CFPB issued a Request for Information (RFI) in order to obtain feedback to help the Bureau better understand the small business lending market, along with a white paper “reviewing the available evidence concerning the small business lending landscape.”

Field Hearing

Director Cordray’s prepared remarks set the table for the release of the white paper and RFI. Cordray described the Bureau’s forthcoming efforts to collect small business data in accordance with Section 1071 of the Dodd-Frank Act, which mandates that the Bureau gather data about small business lending to help identify needs and opportunities in the market and to facilitate enforcement of fair lending laws. Director Cordray also described the challenges that exist in understanding how well the financing and credit needs of entrepreneurs are being served and that the Bureau is particularly interested in collecting and publishing information about the financing and credit needs of small businesses, especially those owned by women and minorities.

Cordray’s remarks were followed by a panel discussion, which included testimony from consumer groups, members of the public, and industry representatives, including:

  • Todd Hollander, Managing Director, Union Bank
  • Makini Howell, Executive Chef and Owner, Plum Restaurants, and Main Street Alliance Member
  • Kate Larson, Director, U.S. Chamber of Commerce
  • Elba Schildcrout, Director of Community Wealth, East Los Angeles Community Corporation
  • Josh Silver, Senior Advisor, National Community Reinvestment Coalition
  • Robert Villarreal, Senior Vice President, CDC Small Business Finance

A recording of the event is available here.

White Paper and RFI

In both the RFI and the white paper, the Bureau states that it is in the early stages of developing regulations implementing Section 1071. The CFPB’s current focus centers on outreach and research.

According to a Bureau press release, the RFI is a “first step toward crafting a rule for the collection and reporting of this lending data.” In the RFI, the CFPB seeks comment on a series of questions ” to enhance [its] understanding of the small business lending market in order to prioritize and guide research and policy development work for implementation of section 1071.” The Bureau explains that “current information on how small businesses engage with credit markets is incomplete or dated and does not paint a full picture of access to financing, particularly for small business owned by women and minorities.”

The white paper includes:

  • An overview of the small business market, including the size of the overall market and the size of women-owned and minority-owned small businesses using SBA standards for qualifying a business as “small.”
  • A discussion of the types of financing products available to small businesses, the types of financial institutions that provide such financing, and data showing the distribution of small business lending among types of lenders and financing products.
  • An analysis of the availability of small business financing during and since the recession began in 2007.

The RFI outlines a series of topics that the Bureau plans to explore, including:

  • Small business definition. The CFPB acknowledges that “small business” has a variety of definitions and that it is intends to develop a practical definition tailored to the needs of Section 1071.
  • Data points. The CFPB seeks information on existing lending data collection and reporting standards, such as the scope of small business lending data that financial institutions currently collect, how that data is used in the industry, and how reporting particular data points could serve the purposes of Section 1071.
  • Financial institutions engaged in small business lending. The Bureau requested input regarding when and how it should exercise its authority under Section 1071 to exempt certain classes of financial institutions from small business lending data collection requirements.
  • Access to credit and financial products offered to businesses. The CFPB seeks feedback regarding the credit products offered to small businesses and information related to challenges in accessing credit.
  • The CFPB seeks feedback regarding the potential privacy concerns related to the disclosure of data reported under Section 1071 and ways the CFPB can mitigate those concerns.

Comments in response to the RFI are due within 60 days after the RFI is officially published in the Federal Register.

Tags: CFPB, Field Hearing

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