The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. Recently, the CFPB released a request for information on its forthcoming initiative to collect from lenders data on small business lending trends and practices. This data collection is important. As it currently stands, there is no national data set on small business lending practices. This means that is it difficult to both identify and address any gaps in small business financing or discrimination within the industry, particularly as it applies to women- and minority-owned small businesses.
For example, research on the San Diego County, Los Angeles County, and Chicago regions shows that bank lending to small businesses has increased since 2010 (after passage of the Dodd-Frank Act), but the number of loans and dollar amount of loans (including loans under $100,000 and loans to small firms with gross revenue under $1 million) were not back to pre-crisis or peak levels as of 2014. Moreover, the loans in low-income Census tracts and in predominantly African American and Hispanic Census tracks were not at levels proportionate to the percentage of businesses in those areas. Without national small business lending data to draw upon, any study of trends, either discriminatory or beneficial, is nearly impossible to produce.
The National Community Reinvestment Coalition (NCRC) has recently released a letter that small business owners can sign to demonstrate their support for transparent data on their financing options. The letter can be accessed here – please consider signing it and encouraging business owners you know to sign on by September 14th.
To learn more about the CFPB and its work, see our past blog about why the CFPB is important.
This blog series will update you on the various challenges that the CFPB faces as well as efforts by Opportunity Fund and others to help preserve this important federal agency. Subscribe for more policy updates from Opportunity Fund.