WASHINGTON, Sept 1 (Reuters) – The U.S. Shopper Monetary Safety Bureau (CFPB) on Wednesday proposed new necessities for monetary establishments to gather and report knowledge on small companies’ entry to credit score in a bid to spice up transparency and honest lending.
The proposed rule would require monetary establishments report the quantity and kind of small enterprise credit score utilized for and prolonged, demographic details about small enterprise credit score candidates, and key components of the value of the credit score supplied, the buyer watchdog stated in a press release.
“We do not know sufficient about whether or not small companies have honest entry to the capital they should generate new jobs and develop the American financial system,” CFPB Performing Director Dave Uejio stated on Wednesday.
The coronavirus pandemic underscored the challenges for U.S. small companies throughout a disaster. The overwhelming majority of American small companies took a success to their income final yr, with minority-owned companies struggling probably the most and worrying extra about accessing credit score, a Federal Reserve survey launched earlier this yr confirmed.
The necessities are a long-awaited a part of the broader Wall Road reforms within the wake of the 2008 monetary disaster. They’d apply to a variety of merchandise, together with time period loans, strains of credit score, bank cards and service provider money advances, the CFPB stated.
The proposed plan will likely be open to public remark for 90 days earlier than the company finalizes the rule. Whereas enterprise house owners are usually not required to supply demographic info, lenders should gather and report the information after they do.
Financial institution and enterprise teams warned the brand new necessities might change into burdensome for lenders.
“A sophisticated ultimate rule would make it tougher for small enterprise to entry credit score,” stated Invoice Hulse, vice chairman of the U.S. Chamber Middle for Capital Markets Competitiveness.
Reporting by Chris Prentice and Pete Schroeder; Modifying by David Gregorio and Jonathan Oatis
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