H.R. 941: Small Lenders Exempt from New Data and Excessive Reporting Act (119th Congress) Bill Summary

This bill, known as the Small Lenders Exempt from New Data and Excessive Reporting Act, aims to amend existing regulations related to small business lending under the Equal Credit Opportunity Act (ECOA). The primary focus of the bill is to provide a clearer framework for compliance with data collection rules established for small business lenders.

Key Provisions

The bill would establish a compliance timeline for financial institutions affected by new lending data collection rules, specifically a 3-year period for compliance after the rules are issued.
After this initial compliance period, there would be an additional 2-year "safe harbor" phase during which institutions must comply with the rules but will not face penalties for any failures to do so.
The covered rules being referred to are defined as a final rule from the Bureau concerning small business lending requirements, published in May 2023.

Definitions

The bill includes definitions crucial for understanding its impact:

Financial Institution: This term is broadened to include a wide range of entities that engage in financial activities, provided they originated 500 or more credit transactions for small businesses in the previous two calendar years.
Small Business: A small business is defined as any entity with gross annual revenues of $1,000,000 or less in the most recently completed fiscal year.

Objective

The bill’s objective is to ease the regulatory burden on smaller lenders by providing them with additional time and protection as they adjust to new data reporting requirements. It aims to support small businesses by potentially allowing more financial institutions to participate in small business lending without the immediate pressure of compliance penalties.

Conclusion

In summary, this legislation is designed to facilitate a smoother transition for small lenders into compliance with new data collection mandates, potentially benefiting small businesses seeking loans through these institutions.