While we don’t know all the details of 1071, you should be able to conduct an impact analysis to determine what resources your institution will require to adopt the rule. 

Think about which areas of your institution will need to be involved. This may include:

• Data collection/IT resources
• Training the first line (this includes loan officers who will be collecting government monitoring information (GMI) required data) 
• Second line testing 
• Compliance 
• Audit 
• Vendor management 

This will help your institution understand the scope of what’s required and allocate resources accordingly. 

Commercial lenders don’t necessarily have a standard application for small business loans. That makes it hard to collect the required information. Create a standard application that collects the anticipated data fields and start training commercial lenders to use it. 

The CFPB has a sample data collection form that can be used as a starting point, but your institution will want to take the time to customize it.

When is an application opened? It’s a simple question, but many lenders don’t have a clearcut answer. Create an official definition for application date as part of your documented loan application process.

Similarly situated applicants need to be treated the same. That includes pricing and terms. Make sure your document your underwriting guidelines – including your exception policy. Creativity is an asset for a commercial lender, but it’s a problem when that customization results in disparate treatment.

If you don’t have a commercial loan application, it’s very likely you’re not collecting the type of data the CFPB will be requiring.  

Now is the time to start thinking about how your institution will collect the small business data required by 1071.

If you’re one of the few small business lenders that already collects the demographic data the CFPB will require you to report on, you’re ahead of the game.   

Stay that way by conducting a fair lending analysis of that data. Slice and dice denial reasons. Determine if similarly situated businesses are receiving similar pricing. The government, press, and consumer groups will be using this data to assess your lending patterns. Use the advantage of time to identify those patterns yourself, decide if anything in your program is problematic, and proactively correct your policies, procedures, and other controls. You need to be prepared to tell your story.  

If you don’t already have fair lending analytics software, you’ll need it. Ask any HMDA reporter – it’s impossible to analyze this data manually.