Good afternoon everyone. As you know, the CFPB has published its Request for Information that deals with small business lending and the Bureau’s plan to implement the requirements of Sec. 1071 of Dodd-Frank. Those requirements will require your bank to collect HMDA-like data on small business loans.
I’ve been included in a meeting at the Bureau on Monday to visit about the RFI and what it means to banks. In particular, I think they’re interested about how smaller banks are likely to be impacted by the rule.
In a nutshell, Sec. 1071 requires the Bureau to gather information used and maintained by banks on credit applications from small businesses. In particular, the RFI is focused on women-owned and minority-owned businesses. The Bureau’s goals include:
• Encourage the extension of credit to small businesses;
• Prioritize the most important data points that your bank will soon be required to collect and maintain;
• They want our help in prioritizing simplicity and clarity in the information gathering process;
• They also want us to help them prioritize elements of the collection process;
• Finally, they want our input on what they can or should do about potential privacy issues.
In Monday’s OBA Update, we listed the statutorily-mandated elements of collection. The trick will be to keep the Bureau for adding very much to those statutory requirements.
Here’s what I’m asking of you, and I don’t have much time to gather this information:
• What is the average amount of your bank’s small business loan?
• To what extent, if at all, is your bank experiencing competition from equity markets that have an increasing presence in small business lending?
• Online lenders are also becoming more and more involved in small business lending. Has your bank experienced any instances of having your customers turn to on-line lenders or credit card companies?
• What about competition from manufacturers like John Deere or fertilizer and seed companies, or other non-bank entities: has your bank experienced any instances in trying to compete with such entities?
• Do you run into situations where your customers are using business credit cards?
….o If so, how do you collect and verify that information?
….o Is it an item on your bank’s credit application?
• Are your customers pushing back against or otherwise objecting to the increasing requests for private information? Most of these kinds of information-gathering efforts in the application process don’t apply to alternative lenders.
• Do you have concerns about “privacy” for your customers?
• What is the typical annual revenue of your small business customers (the CFPB thinks this is critical).
• One of the things this proposal attempts to establish is a “firewall” between the person or persons that collect the data and the lending officer?
• Do you have plans to add an additional compliance officer or officers to collect the data that will be required by the CFPB’s new data proposal?
If at all possible, will you return this form or email me (email@example.com) by this Friday, July 28?
Thanks very much!