ETA informs CFPB on small business lending

In July 2017, The Consumer Financial Protection Bureau called for comments on a section of the 2010 Dodd-Frank Act that amended the Equal Credit Opportunity Act. The amendment requires financial institutions to compile, maintain and report information concerning credit applications made by women-owned, minority-owned and small businesses. In response to the request, the Electronic Transactions Association submitted an in-depth letter to the CFPB on Sept. 8.

"ETA supports fair lending and increased access to credit for small businesses, including women-owned and minority-owned," wrote Meghan M. Cieslak, ETA Director, Communcations, in a notification about the association's comment letter. "ETA appreciates the Bureau's commitment to weighing any benefits of a future proposed rule against the costs associated with instituting new data collection for small business lenders."

What CFPB wants to know

The bureau stated it seeks to learn more about the:

• Small business financing market, including understanding more about the products that are offered to small businesses, including women-owned and minority-owned small businesses, as well as the financial institutions that offer such credit.
• Business lending data that currently is used and may be maintained by financial institutions in connection with credit applications made by small businesses, including women-owned and minority-owned small businesses, and the potential complexity and cost of small business data collection and reporting.
• Privacy concerns related to the disclosure purposes of section 1071.

Key points from ETA letter

The ETA's 17-page response was submitted by PJ Hoffman, ETA Director of Regulatory Affairs. Cieslak summarized the key points from the 17-page letter as follows:

• ETA and its members support an inclusive financial system that provides high quality, secure, and affordable financial services for the broadest possible set of consumers and small businesses.
• ETA member companies touch, enrich, and improve the lives of underserved communities while making the global flow of commerce possible by providing financing for small businesses.
• Adding any additional data collection, as this rulemaking is likely to do, will present implementation and operational challenges. The Bureau must be vigilant in weighing the implementation and operational costs associated with data collection against the benefits.
• Efforts by policymakers to regulate financial products and services should be done collaboratively with industry participants and with careful consideration of the many types of business models and products in the marketplace.
• ETA stands willing to work with the Bureau to create a positive regulatory environment for small business lenders and their borrowers.

The CFPB's request for comments can be found at www.consumerfinance.gov/policy-compliance/notice-opportunities-comment/open-notices/request-information-regarding-small-business-lending-market/ . The full text of the ETA's comments is available at www.electran.org/publication/transactiontrends/wp-content/uploads/eta-comments-on-cfpb-rfi-1071-small-business-lending.pdf.

If you wish to share insights on this market with the CFPB, the comment period closes Sept. 14.

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