Here are the latest updates on Section 1071 implementation and broader Consumer Protection Bureau (CFPB) oversight.
Table of Contents- 1071 Status and Legal Developments
- Legislative Efforts to Modify or Repeal 1071
- Strategic Compliance Considerations
- Ncontracts' Implementation Support
What's the status of 1071 and any legal updates?
Update: November 12, 2025
The CFPB released a new proposed rule for 1071 on November 12, 2025, that would move the Section 1071 compliance deadline to January 1, 2028, for all covered institutions and adjust the scope of 1071 compliance obligations broadly.
Key Proposed Changes
- Coverage Threshold Increase: The origination threshold would increase from 100 to 1,000 covered credit transactions over two consecutive years. Farm Credit System lenders would be completely exempt from the rule.
- Narrower Transaction Scope: The rule would exclude merchant cash advances, agricultural lending, and loans of $1,000 or less from covered transactions. The definition of a small business would change from $5 million to $1 million in gross annual revenue.
- Streamlined Data Collection: The CFPB proposed removing five discretionary data points: application method, application recipient, denial reasons, pricing information, and number of workers.
- Modified Demographics: Demographic collection changes include removing LGBTQI+-owned business status and implementing a binary male/female sex model per Executive Order 14168. The CFPB is also considering limiting ethnicity and race collection to aggregate categories only.
- Unified Compliance Date: The compliance structure simplifies to a single date of January 1, 2028, for all covered institutions, eliminating the previous tiered approach with dates in 2026 and 2027.
Summary Changes
| Category | Current Role | Proposed Rule |
| Covered Institutions | ≥100 covered transactions in each of 2 prior years | ≥1,000 covered transactions in each of 2 prior years |
| FCS Lenders | Covered | Exempt |
| Small Business Definition | ≤$5 million gross annual revenue | ≤$1 million gross annual revenue |
| MCAs | Covered | Excluded |
| Agricultural Lending | Covered | Excluded |
| Small Dollar Loans | Covered | Excluded (≤$1,000) |
| Data Points | 20 data points | 15 data points (removes 5) |
| LGBTQI+ Business Status | Required | Removed |
| Gender Data Point | Required for principal owners | Binary male/female only |
| Compliance Date | Tiered: July 2026, Jan. 2027, Oct. 2027 | Single: January 1, 2028 |
Will there be any more legislative efforts to delay or stop 1071?
Two Congressional bills introduced in February could significantly impact Section 1071:
H.R. 976: 1071 Repeal to Protect Small Business Lending Act
- Complete repeal of demographic and application data collection requirements
H.R. 941: Small LENDER Act
- Maintains underlying data requirements
- Provides three-year transition period plus two-year enforcement grace period for qualifying small-business lenders
How should financial institutions plan to comply with 1071?
Until the proposed rule becomes final, institutions should distinguish between statutory mandates that will survive any rule revision and regulatory additions that may be modified or eliminated:
Statutorily Required (Will Remain Unless Congress Acts)
- Business demographic status inquiry (women-owned, minority-owned, small business)
- Core application data (number, date, type, purpose, amounts, action taken)
- Geographic data (census tract)
- Financial data (gross annual revenue)
- Principal owner demographics (race, sex, ethnicity)
- Firewall protections for demographic data
- Annual Bureau reporting
- 3-year record retention
- Public data availability
Recommended Approach
With deadlines two years away, small business lenders need to decide how they will respond to this change. Rather than dismantling compliance programs entirely, it’s a good idea to:- Review current readiness and compare it to the proposal to determine what may need to change,
- Preserve foundational data collection capabilities for statutory minimums,
- Streamline application processes to efficiently capture required information,
- Maintain flexibility to adapt to changing requirements, and
- Avoid complete program elimination that would require costly re-implementation.
The statutory foundation of Section 1071 remains unchanged regardless of regulatory modifications, making strategic infrastructure preservation the most prudent approach.
How can Ncontracts help financial institution lenders get ready for 1071?
Staying updated on 1071 changes is critical. Ncontracts will continue to closely monitor Section 1071 developments and deliver real-time updates, expert analysis, and actionable guidance through our compliance management platform, Ncomply — helping your institution stay ahead of changes and confidently manage compliance.
N1071 Solution Components
Our offerings allow you to focus on meeting statuary requirements:- Governance Framework: Customizable sample policies and procedures
- Data Management: Software for data transmission and analysis
- Regulatory Intelligence: Built-in updates, enforcement actions, and guidance
- Training Platform: Unlimited user access with video modules and knowledge assessments
- Implementation Support: Remote training and setup assistance
Our innovation team also continuously adapts tools to maintain compliance readiness as requirements evolve.
Related: Financial Services Enforcement Action Tracker | Ncontracts
Key takeaways: Preparing for 1071
While the regulatory landscape remains uncertain, the underlying statutory requirements of Section 1071 provide a stable foundation for compliance planning. Institutions that maintain core data collection capabilities and streamlined processes will be best positioned to adapt efficiently to whatever final requirements emerge from ongoing litigation and potential regulatory revisions.
Looking for more 1071 information? Visit our 1071 Resource Page.
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