Five Reasons to Prepare for 1071 Rules: Small Business Reporting for Women & Minority Owned Businesses

Do you know the top five reasons to start preparing for implementation of the Section 1071 rules? Some say these new rules will be the biggest compliance challenge in the last 20years. The CFPB has promised the final rules by March 31, 2023; mandatory compliance will follow in 18 months. Don’t let the long implementation deadline lull you into complacency.

Learning Objectives

• Understand important key dates for the final rule and mandatory compliance
• Use the materials to develop a game plan for implementation
• Define key terms like a “covered application,” minority-owned business, women-owned business, and “small business” proposal for a business that had $5 million or less in gross annual revenues for the preceding year
• Distinguish which data elements may be restricted from access by certain employees
• Explain the proposed data fields – the 22 fields range from application date to things not mandated by Dodd-Frank, such as “application recipient”
• Compare the procedures used for small business loan applications today to the potential sweeping changes required by the rules

Industry experts have predicted that the implementation of the “Section 1071 Rules” for loan applications from small businesses owned by women and minorities will be the greatest compliance challenge in the last 20 years. Here’s why you should begin planning now.

1. The purpose of the 1071 Rules is to require data collection and accurate reporting to ensure that all borrowers receive fair treatment. This data will be available to regulators and community groups. What will it reveal about your financial institution?
2. There is no “model” application form for small business loans. What changes will be required to collect the required information? Does your current loan application system have the capacity to capture the required information?
3. Early preparation and planning can save time, money, and headaches. What data should be included in a “gap analysis” to determine the scope of impact?
4. Effective training will play a critical role in the successful implementation of the new rules.
5. What should senior management and the board understand about the proposed rules?