ALTA Joins Groups in Letter to CFPB on Small Business Loan Reporting Rule

January 11, 2022

ALTA and five other trade groups responded to the Consumer Financial Protection Bureau’s (CFPB) proposed rule to implement the small business lending reporting requirements established under Section 1071 of the Dodd-Frank Act.

The proposal would allow the CFPB to collect information on applications for credit for small businesses, including those that are owned by women or minorities.

Joining ALTA on the letter were the Mortgage Bankers Association, CRE Finance Council, National Apartment Association, National Multifamily Housing Council and The Real Estate Roundtable.

Section 1071 applies only to small business lending, and the Small Business Administration (SBA) and federal prudential regulatory agencies have long recognized that lending to finance income-producing investment properties is not small business lending.

Most commercial real estate lending involves the financing of investments in commercial and multifamily investment properties, therefore, the overlap between commercial real estate lending and small business lending under Section 1071 should be very narrow, the groups state in the letter. That is, commercial real estate lending that is also small business lending under Section 1071 should, generally, be limited to small business loans secured by commercial property that the small business would occupy for its business.

“We appreciate that the proposed rule recognizes the distinction between financing income-producing properties and small business lending, at least in part, by proposing an interpretation that clarifies that loans secured by 1-4 unit dwelling investment properties fall outside the scope of Section 1071,” the letter says. “We urge the Bureau to clarify also that other investment property types lending similarly fall outside the scope of Section 1071. A clarification of the clear boundary between small business lending and all investment property lending would ensure that the information gathered under Section 1071 reflects true small business lending and would enable commercial real estate lenders to confidently screen out a category of loans that are not small business loans under Section 1071.”

The groups make several other recommendations and urge the CFPB to provide a maximum “covered credit transaction” amount threshold, which would similarly provide an efficient screen for excluding credit applications from non-small businesses.

Contact ALTA at 202-296-3671 or