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It has been a long time coming, but the small-business lending data collection rule, or 1071 (the 2026 Final Rule), has finally been issued, and many community banks around the country are celebrating an escape from compliance.
Section 1071 of the Dodd Frank Act mandated the collection and reporting of small-business lending data under the Equal Credit Opportunity Act and Regulation B. In the years since the passing of the Dodd Frank Act, there have been related proposed rules, a previous final rule, many comments and letters of opposition, and even litigation.
What are banks to do now that there is finally a final rule?
Step One: Determine whether your bank will be a reporter. The earlier final rule did away with the previous tiered approach to determining eligibility and compliance dates. The 2026 Final Rule applies to financial institutions that originated at least 1,000 covered transactions for small businesses within each of the previous two calendar years. Covered transactions include all business loans, lines of credit, and credit cards with the exception of merchant cash advances, agricultural lending, and small-dollar loans, which are excluded from the definition of covered transactions. A small business for purposes of the 2026 Final Rule is one with $1 million or less in gross annual revenue (subject to periodic inflation increases). This is good news for all banks and significantly less than the definition in the previous rule that defined small businesses as those with $5 million or less in gross annual revenue.
For all banks that originate 1,000 or more covered transactions in 2026 and 2027, data collection will begin on January 1, 2028. The 2026 Final Rule also reduced the number of data points required for collection and changed some of the requirements for the collection of demographic data.
Step Two: After reviewing your bank’s portfolio based on the above information, if it appears likely that your bank will be a reporter, it is time to discuss how the data will be collected, maintained, and reported. Outside the bank, third-party vendors will need to be consulted to determine capabilities and begin to test systems. Internally, members from compliance, operations, and management should be involved in all discussions. Additionally, it is important to note that the firewall requirement to separate demographic data from anyone with decision-making authority on a loan remains in place in the 2026 Final Rule. Decisions will need to be made related to the storage of demographic data in an appropriate manner. The 2026 Final Rule allows, but does not require, a bank that “reasonably anticipates” reporting under the rule to collect certain demographic data up to 12 months prior to January 1, 2028, in order to ease the transition to becoming a reporter.
Jones Walker LLP will be offering an overall 1071 training for compliance officers and other employees involved in the process. Additionally, bank-specific lender training will be offered upon request. To indicate interest or for more information, please contact Memrie Fortenberry or Lisa Smith.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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