Small LENDER Act

This bill would increase the threshold for financial institutions required to report small business credit application data to the Consumer Financial Protection Bureau, applying only to those originating at least 500 small business loans annually. It proposes to redefine small businesses for these reporting purposes as those with $1 million or less in gross annual revenue, down from the current $5 million limit. Additionally, the legislation would provide a three-year compliance timeline from the rule's issuance date followed by a two-year safe harbor period during which institutions would not face penalties for noncompliance.

This bill affects financial institutions that originate small business credit transactions, specifically exempting those that originate fewer than 500 such transactions annually. It also impacts small businesses, which the bill redefines as entities with gross annual revenue of $1 million or less. Additionally, the Consumer Financial Protection Bureau (CFPB) is affected as the agency responsible for overseeing these modified reporting requirements and compliance timelines.

• Modified reporting threshold for financial institutions. The bill limits small business credit application reporting requirements to financial institutions that have originated at least 500 credit transactions for small businesses in each of the two previous years.
• Revised definition of small business. The legislation redefines small businesses for the purposes of these reporting requirements as entities with gross annual revenue of $1 million or less, lowering the current $5 million threshold.
• Extended compliance timeline and safe harbor period. Financial institutions are granted three years from May 31, 2023, to comply with the reporting rule, followed by a two-year safe harbor period during which no penalties will be issued for noncompliance.

The bill provides financial institutions three years from the date the final CFPB rule was issued (May 31, 2023) to comply with reporting requirements, followed by a two-year safe harbor period during which institutions are exempt from penalties for noncompliance.

The bill modifies the Consumer Financial Protection Bureau’s (CFPB) Section 1071 final rule by increasing the loan-origination threshold for reporting requirements and narrowing the definition of a small business. It also extends the compliance timeline and establishes a safe harbor period for financial institutions subject to the rule.

The bill aims to modify and narrow the scope of financial reporting requirements for small business credit applications by increasing the transaction threshold for reporting institutions and lowering the revenue ceiling for businesses defined as small. It also seeks to extend the compliance timeline and establish a safe harbor period for financial institutions subject to the Consumer Financial Protection Bureau's reporting rules.