Summary of HR 976: 1071 Repeal to Protect Small Business Lending Act

Purpose and Intent

Introduced on February 4, 2025, HR 976, titled the 1071 Repeal to Protect Small Business Lending Act, aims to repeal Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This section mandates the collection and reporting of demographic data on small business loan applicants by financial institutions. The bill's proponents argue that these requirements impose excessive regulatory burdens that hinder small business lending, particularly affecting community banks and credit unions.

Key Provisions

• Repeal of Data Collection Requirements: The bill seeks to repeal Section 704B of the Equal Credit Opportunity Act, which requires financial institutions to collect and report data on small business loans, including the demographic status of applicants (e.g., women-owned or minority-owned businesses).

• Conforming Amendments: The bill includes amendments to remove references to Section 1071 from both the Dodd-Frank Act and the Equal Credit Opportunity Act, effectively eliminating the data collection mandate.

Background and Need for Legislation

• Impact on Small Lenders: The data collection requirements have led to increased compliance costs for financial institutions, particularly smaller lenders. This has raised concerns that such burdens could reduce access to credit for small businesses, which are vital for local economies.

• Privacy Concerns: The public disclosure of collected data raises significant privacy issues, especially without robust data protection measures in place.

• Regulatory Overreach: Critics of Section 1071 argue that it grants the Consumer Financial Protection Bureau (CFPB) excessive authority to expand data collection and impose diversity, equity, and inclusion measures, potentially leading to enforcement actions against lenders.

Affected Parties

• Financial Institutions: The repeal would primarily benefit smaller financial institutions, such as community banks and credit unions, by reducing compliance costs and regulatory burdens.

• Small Businesses: Proponents believe that easing these requirements will enhance access to credit for small businesses, particularly those owned by minorities and women.

Legislative Process and Timeline

• Committee Action: The bill was reported (amended) by the Committee on Financial Services on May 6, 2025, with a vote of 27-22 in favor of reporting it out of committee.

• Next Steps: Following its reporting, HR 976 has been placed on the Union Calendar for further consideration by the House.

• Related Legislation: A companion bill, S 557, has been introduced in the Senate, indicating bipartisan interest in the repeal of these data collection requirements.

Conclusion

HR 976 represents a significant shift in the regulatory landscape for small business lending by proposing the repeal of data collection mandates that many stakeholders argue are burdensome. If passed, the bill could enhance lending opportunities for small businesses while alleviating compliance pressures on financial institutions.