Policy Issues

Commercial Real Estate Industry Comments on Small Business Loan Reporting Rule

January 6, 2022

(Download the Coalition Letter)

A coalition of CRE industry associations that includes The Real Estate Roundtable submitted comments on Jan. 6, 2022 to the Consumer Financial Protection Bureau on proposed rules to implement the small business lending reporting requirements established under § 1071 of the Dodd-Frank Act to collect information on small business lending, including lending to women- and minority-owned small businesses.

The coalition's  specific recommendations fall into the following eight categories:

1.)  Investment properties exclusion
Clarify that the investment properties exclusion from § 1071 applies to all investment property lending.

2.)  Maximum “amount applied for” exclusion
Establish a maximum credit “amount applied for” set at the $750,000 statutory limit for Small Business Association (SBA) direct loans.

3.)  Transactional threshold

Increase the transactional threshold from 25 to 500 small business loan originations in each of the two preceding calendar years.

4.)  Implementation period
Provide an implementation period that covers two full calendar years after the effective date of the final rule rather than the proposal of “about 18 months.”

5.)  Small business definition

For an applicant that is a newly created single-purpose entity (SPE), permit a financial institution to apply the $5 million gross annual revenue threshold to either the gross annual revenue of the property for its most recent fiscal year under its prior owner or the SPE’s projected gross annual revenue rather than to its (nonexistent) prior year’s gross annual revenue.

Provide additional guidance on what types of entities may be affiliates of an applicant, e.g., as a result of common ownership or common control.

6.)  Firewall

Clarify operational factors that a financial institution may consider when determining that an officer or employee “should have access” to demographic information collected under § 1071.

7.)  Race and ethnicity information
Treat the reporting of race and ethnicity the same as the proposed treatment of the reporting of sex, in cases where the applicant does not provide the information. 

8.)  Applicant-provided information

Remove the requirement to replace applicant-provided information with information the financial institution verifies.

The coalition letter addresses each of these recommendations in greater detail. It also provides a compilation of all suggested language for implementing these recommendations in Appendix A.

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