CFPB Pushes Back Section 1071 Deadlines

The Consumer Financial Protection Bureau (CFPB) has once again delayed its compliance timeline for the Section 1071 rule under the Equal Credit Opportunity Act, reflecting ongoing concerns over readiness, legal challenges, and operational impacts for small business lenders. Originally launched in March 2023, the rule requires lenders to collect and report detailed demographic and application data on small-business loans, promoting fair access and credit equity.

New Compliance Deadlines

According to an interim final rule released June 18, 2025, and reported by outlets such as Consumer Finance Monitor and JD Supra, the CFPB has adjusted the compliance schedule for all three volumes of lenders:

• Tier 1 (≥2,500 SB credit apps): from Oct 1, 2024 → July 1, 2026; first filing due June 1, 2027

• Tier 2 (500–2,499 apps): from Apr 1, 2025 → Jan 1, 2027; first filing due June 1, 2028

• Tier 3 (100–499 apps): from Jan 1, 2026 → Oct 1, 2027; first filing due June 1, 2028 

Lenders may choose which two-year window: 2022–23, 2023–24, or 2024–25 to determine eligibility tiers. Importantly, supervised institutions may begin collecting demographic data up to 12 months before their compliance date, giving teams time to test systems and workflows.

Legal and Regulatory Dynamics

The extension is motivated by ongoing litigation: courts in Texas, Kentucky, and Florida have stayed compliance for parties involved in those suits. To avoid inequity across lenders, the CFPB uniformly delayed deadlines for everyone, even those not directly involved in litigation.

Additionally, the agency has signaled its intent to reopen the rulemaking process, seeking fresh input on key provisions.

Adding to the regulatory swirl, Senator Tim Scott and other Republicans have pursued legislative language to delay Section 1071 enforcement for a decade, though the Senate parliamentarian ruled the CFPB must remain funded and implementation delays are allowed via budget reconciliation.

What This Means for Lenders

1. Extra Time, but Sooner Is Smarter

   The extended timeline gives breathing room, but early adopters will benefit. Starting early allows firms to pilot demographic data collection, identify system gaps, and streamline internal processes.

2. Prepare for Rule Change

   With a reopening of formal rulemaking, key elements, like tier definitions, data scope, firewall mechanisms, and submission formats, could shift. Dynamic rule revisions are coming; lenders must stay agile.

3. Data Strategy Alignment

   Securing accurate demographic data, covering race, gender, ethnicity, census tract, ownership size, credit amount, and more, is non-negotiable. Firms should map data flows now to ensure compliance and avoid operational bottlenecks in 2026–27.

4. Compliance Tier Flexibility

   The option to choose between origination years allows lenders to manage their tier status strategically. Lowering thresholds could delay obligations, an option worth evaluating.

5. Watch the Legal Landscape

   National litigation and rulemaking may ultimately mandate different obligations than anticipated. Organizations should monitor updates closely and engage in comment periods like the one open until July 18, 2025 

Looking Ahead: Where It’s Going

• Next NPRM & Comment Opportunity

  A new Proposed Rule Notice is expected later this year. Lenders, fintech platforms, fintech, and compliance advisors should weigh in—not only on practical implementation points, but also on how data collection policies intersect with borrower privacy.

• Potential Legislative Repeal Efforts

  Even though budget rules limit defunding of the CFPB, broader efforts to repeal or scale back 1071 could emerge in Congress. Industry lobbying could gain momentum.

• Tier Adjustment Risks

  If 2024–25 volumes change significantly, lenders may find themselves reclassified. Those near thresholds should track monthly portfolio activity carefully.

• Early Adopter Advantages

  Institutions that pilot data collection, and even voluntarily report ahead of schedule, could see reputational gains among borrowers and regulators, positioning themselves for scaling embedded lending and analytics.

Final Take

The CFPB’s latest extension on Section 1071 compliance doesn’t signal delay; it's a recalibration. This pause offers a valuable runway for lenders and fintechs to get systems, processes, and policies ready as the rule evolves.