Compliance Journal June 2026
Special Focus Most Wisconsin Banks Exempt from Section 1071 Rule After Latest Round of Revisions It has been a long process since the Bureau of Consumer Financial Protection (CFPB) issued its first rule in May 2023 to implement changes to the Equal Credit Opportunity Act made by Section 1071 of the Dodd-Frank Act (Section 1071). The changes require covered financial institutions to collect and report certain small business loan data. Litigation soon followed which resulted in revisions to the mandatory compliance dates via interim final rules. Then, in November 2025, CFPB proposed revisions to amend the 2023 rule having reconsidered the impact on smaller lenders and its approach to advancing the statutory purpose of Section 1071. After reviewing comments received to proposed changes in November 2025, CFPB published a final rule in the Federal Register May 1, 2026, narrowing the rule’s scope of applicability and reducing the number of data points. The final rule is effective June 30, 2026. The compliance date for the rule is January 1, 2028, for all covered financial institutions. The following is a summary of the changes. May 2026 Revisions The final rule made the following revisions to the definitions of “covered credit transactions”, “covered financial institutions”, and “small business” to better: reflect core products traditionally used for small businesses’ formation and operation, recognize what is a true small business, and balance the need of collected data with the cost and burden of implementation on small creditors. CFPB also reconsidered the impacted data and eliminated several items from being collected and reported. The final rule also narrowed the scope of covered financial institutions and raised the origination threshold of covered credit transactions. Revised Covered Credit Transactions Definition In the May 2026 final rule, CFPB concluded that the initial iterations of data collection should focus on core, widely-used lending products most likely to be foundational to small businesses’ formation and operation. The final rule therefore excludes merchant cash advances, agricultural lending, and small dollar loans in an amount of $1,000 or less from the definition of covered credit transaction. The rule defines “agricultural lending” as a transaction to fund the production of crops, fruits, vegetables, and livestock, or to fund the purchase or refinance of capital assets such as farmland, machinery and equipment, breeder livestock, and farm real estate improvements. The final rule also includes an inflation adjuster such that the $1,000 small dollar loan amount will be adjusted for inflation in $100 increments every five years after January 1, 2030. The changes narrow the number of loans subject to the rule. Revised Covered Financial Institutions Definition Also, in the May 2026 final rule, CFPB concluded that the initial iterations of data collection should focus on larger core lenders. The final rule therefore contains two changes to the covered financial institutions definition. First, the final rule excludes Farm Credit System (FCS) lenders from coverage. Second, the final rule raised the origination threshold from 100 to 1,000 covered credit transactions for each of two consecutive years. As a result of the change, a “covered financial institution” is now defined as a financial institution, other than a FCS lender, that originated at least 1,000 covered credit transactions for small businesses in each of the two preceding calendar years.