Now, More than Ever, Implementing Section 1071 is Essential to the Survival of Small Businesses

Luz Urrutia, CEO of Opportunity Fund, had the opportunity to participate as a Small Entity Representative in the Consumer Financial Protection Bureau’s (CFPB) Small Business Regulatory Enforcement Fairness Act (“SBREFA”) panel. The panel was convened in October 2020 to provide perspective regarding the small business implications of the CFPB’s forthcoming Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act final ruling.

Small business ownership drives economic mobility, creates jobs, and sustains families and communities. Yet entrepreneurs of color, low income individuals, immigrants, and women are disproportionately denied vital capital and support. After 10 long years, the CFPB is taking steps to propose a final rule for the implementation of Section 1071. Section 1071 seeks to better understand the small business lending landscape and assess the needs of small businesses seeking affordable and responsible financing.

Opportunity Fund has been a strong advocate for a rule that is broad and expansive with minimal exemptions, covers a broad range of products and collects pricing data in the form of APR. Greater transparency will help the small business lending ecosystem better serve small businesses. Implementing Section 1071 will help lenders across the country, including Opportunity Fund, better connect underserved entrepreneurs to working capital and resources in order to build a more inclusive economy for everyone. 

During the panel, CEO Luz Urrutia advocated for a rule that includes all financial institutions and products (including merchant cash advances, factoring and leasing) sought out by small businesses. She underscored that a pricing data point in the form of APR needs to be collected to understand what products are offered to whom and at what cost.

To read our official written feedback following the CFPB Section 1071 SBREFA Panel click here.

To learn more about the CFPB’s small business lending data collection rulemaking and the SBREFA Panel click here.

Luz speaking at the Consumer Financial Protection Bureau Symposium: Section 1071 of the Dodd-Frank Act on November 6, 2019. Washington, D.C.