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On June 25, the CFPB released a formal action to extend the compliance deadlines for its Section 1071 small business lending rule (previously discussed here, here, and here).Once issued, the rule was challenged in the United States District Court for the Southern District of Texas and stayed pending the Supreme Court's decision in CFPB v. CFSA. After the Bureau prevailed at the Supreme Court, the federal court ordered the Bureau to extend the compliance deadline to compensate for the stay.
Under the new rule, the deadlines are extended out 290 days.Accordingly, the new dates are as follows:
- Tier 1 institutions (highest volume lenders): The new compliance date will be July 18, 2025, and the first filing deadline will be June 1, 2026.
- Tier 2 institutions (moderate volume lenders): The new compliance date will be January 16, 2026, and the first filing deadline will be June 1, 2027.
- Tier 3 institutions (lowest volume lenders): The new compliance date will be October 18, 2026, and the first filing deadline will be June 1, 2027.
The small business lending rule also includes a 12-month grace period where the Bureau will not assess penalties for errors made in good faith in data reporting.
Putting it into Practice: By pushing out the compliance deadline, the CFPB is acknowledging the impact that recent litigation brought by trade groups has had in the rule's implementation.With the Bureau facing two separate lawsuits challenging 1071—one in Texas and a second one in Kentucky—there is a chance that these deadlines can be pushed out yet again.However, given the heavy burden that lenders must bear to comply with the rule, they should still ensure they have a plan in place in the event the Bureau prevails.
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