In Congress, anything that helps small businesses typically comes with bipartisan support. But section 1071 of Dodd-Frank is a little complicated.
It is another section of Dodd-Frank that is still in the process of being implemented (the other being 1033). And many in Congress don’t like it. So what is Section 1071?
At first glance, it seems pretty innocuous. Section 1071 simply requires small business lenders to report how much they are lending to minority, women and LGBTQ-owned small businesses. However, these factors cannot influence lending decisions.
Both the House and Senate passed a bill that would remove Section 1071 but President Biden vetoed the measure.
Now, the rule is set to go into effect in 2024 and the first compliance deadline is October 1, 2024. Although there is a preliminary injunction to the rule based on a lawsuit challenging its validity.
Banks do not like this new requirement at all as it will require new systems and a great deal of expense.
Regardless of all of this, small businesses still need more access to capital. And minorities need it more than most.
Editor’s note: This is our last newsletter of 2023. Thanks for being part of our community. We would like to wish all our readers a happy and relaxing holiday season and we will see you again on January 2, 2024.
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- Source: https://www.fintechnexus.com/fintech-nexus-newsletter-december-21-2023-small-business-lenders-must-get-ready-for-section-1071/
