CFPB Redraws Small Business Line at $1 Million in Revenue
America’s consumer finance watchdog wants to pare back and slow its small‑business lending data rule.
The Consumer Financial Protection Bureau (CFPB) argued that a tighter phased start will lead to improved data quality and lower compliance costs. The 198‑page notice dealing with the change is slated for Federal Register publication Thursday (Nov. 13), with comments due 30 days after publication.
In a summary section of its proposal, the CFPB said it would focus the first wave of reporting on “core” products, “core” lenders and “core” data points. Practically, that means excluding merchant cash advances, agricultural lending and very small loans from coverage.
The agency proposed redefining a “small business” as one with $1 million or less in prior‑year revenue, down from the $5 million level set in 2023.
The regulator said the shift would better align with Community Reinvestment Act metrics and existing Regulation B practices and is seeking Small Business Administration (SBA) approval for the alternative size standard.
The CFPB also acknowledged its earlier analysis suggested coverage could fall versus the 2023 rule but said a $1 million bar would still cover a “supermajority” of firms.
Data collection would be scaled back as well. The CFPB would remove several discretionary data fields — including application method and recipient, denial reasons, pricing information and number of workers — and overhaul how demographic information is collected to comply with newer executive directives. The compliance date for lenders would move to Jan. 1, 2028.
Coverage would shift meaningfully. With the steeper threshold and exclusions, the CFPB estimated about one quarter of rural depository branches and 63% of non‑rural branches would belong to covered institutions, compared with 65%-68% and 84%-85% under today’s baseline. Those estimates also reflect the proposed exclusion of agricultural lending.
Why the change? The CFPB said the 2023 rule’s wider scope triggered pushback and litigation, and an incremental approach — such as the Home Mortgage Disclosure Act’s decades‑long build‑out — will better serve the market and the statute’s goals.
The planned changes came as the future of the CFPB is in limbo. The bureau announced Tuesday (Nov. 11) that while it’s legally prohibited from drawing additional funds from the Federal Reserve to continue its operations, current funding is expected to last through at least the remainder of 2025.
This announcement came amid ongoing uncertainty over the agency’s budget and workforce and the Trump administration’s efforts to dismantle the CFPB.
A legal opinion from the Department of Justice’s Office of Legal Counsel this week concluded that because the Fed is not currently reporting “combined earnings,” as defined under the Dodd-Frank Act (the statute that created the CFPB), the agency can’t lawfully access funds from the central bank.
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