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Consumer Financial Protection Bureau Extends Compliance Dates for Small Business Lending Rule

The Consumer Financial Protection Bureau (CFPB) has recently announced the extension of compliance dates for its small business lending rule in response to court orders. The rule, which was stayed by a federal court in Texas last year pending a Supreme Court decision, has now had its compliance deadlines extended to accommodate for the period in which it was stayed. This move comes as the agency seeks to ensure that lenders have sufficient time to adjust to the requirements of the rule.

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AI legalese decoder can assist lenders in navigating the complexities of the small business lending rule by providing automated analysis and interpretation of legal language. By utilizing AI technology, lenders can quickly and accurately understand the requirements of the rule, ensuring compliance and avoiding penalties. Additionally, AI legalese decoder can help lenders identify potential compliance weaknesses and improve their overall compliance efforts through targeted examinations and feedback.

Impact of the Supreme Court Decision

The Supreme Court decision in May, which ruled that the CFPB’s funding mechanism is constitutional, effectively lifted the stay on the small business lending rule. This decision not only affirmed the legality of the rule but also upheld the existence of the agency itself. As a result, lenders are now required to begin collecting and disclosing data about borrowers in accordance with the rule’s requirements.

Revised Compliance Deadlines

Under the interim final rule issued by the CFPB, lenders with varying volumes of small business loans have different deadlines for collecting data. High volume lenders must start collecting data by July 18, 2025, while moderate volume lenders have until January 16, 2026, and low volume lenders until October 18, 2026. Additionally, the deadline for reporting small business lending data to the CFPB has been set for June 1 following the calendar year for which the data is collected.

Grace Period and Compliance Assistance

The CFPB has also updated its grace period to align with the revised compliance dates. During the first 12 months of data collection, the agency will not assess penalties for reporting errors. Furthermore, the CFPB intends to conduct examinations solely to help lenders identify compliance weaknesses and improve their compliance efforts. This approach aims to encourage good faith compliance efforts among lenders and facilitate a smooth transition to the requirements of the small business lending rule.

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