The Consumer Financial Protection Bureau (CFPB) has introduced new regulations that mandate banks to report demographic and income information for small business loan applicants, according to the Associated Press. Policymakers anticipate that these measures will enhance transparency and minimize discrimination in the small business lending market.
For over a decade, the Dodd-Frank Act has required the CFPB to gather data on small business lending decisions. However, the bureau has faced a lawsuit from the California Reinvestment Coalition for not complying with this mandate.
While bank regulators have historically collected data on residential mortgage applicants under the Home Mortgage Disclosure Act to detect redlining, there is limited information available on the criteria banks use to approve or deny small business loans. Consequently, it is difficult to determine whether banks discriminate against Black and Latino small business owners.
The small business lending market is currently valued at approximately $1.4 trillion.
Click play to listen to the AURN News report from Jamie Jackson:
