The Consumer Financial Protection Bureau’s New Small Business Lending Rule Will Help Ensure Fair Access to Affordable Credit for Small Business Owners
FOR IMMEDIATE RELEASE
March 31, 2023, New York - Inclusiv applauds the Consumer Financial Protection Bureau’s leadership in ensuring equitable access to credit for small business owners, particularly people of color, people who are LGBTQI+, and women who currently face significant barriers to accessing capital to grow their small businesses. Yesterday the CFPB finalized a new rule that will require lenders to collect and report key data points about their small business lending, including information about loan pricing, loan denials, and business owner demographics and Minority- and Women-Owned Business Enterprise (MWBE) status.
Small businesses are a major engine of our economy. Over the last 25 years, small businesses generated more than 60% of the new jobs in the United States. Prior to the COVID-19 pandemic, there were 10 million small businesses owned by people of color, but during the early days of the pandemic, Black-owned businesses suffered an initial closure rate of 40% and Latino-owned businesses 37%, compared to 17% for White-owned businesses. These closures, coupled with well-documented racial disparities in access to the Paycheck Protection Program and small business credit more broadly, underscore the critical need for robust fair lending analysis of small business lending data to ensure Black- and Latino-owned small businesses have the opportunity to grow and thrive.
The CFPB’s commitment to making small business lending transparent will help mission-driven lenders understand the small business lending landscape and find opportunities to close lending gaps and address disparities. Community development credit unions are already committed to this work. In 2022 alone, Community Development Financial Institution (CDFI) credit unions made more than $21.8 billion in small business loans to local businesses in 47 states, Washington, DC and Puerto Rico.
Director of Communications, Inclusiv
Founded in 1974, Inclusiv empowers its member credit unions to advance financial inclusion for everyone through advocacy, education, technology, and investment initiatives designed to create wealth-building opportunities in communities excluded from the financial mainstream.
Inclusiv was instrumental in establishing the Community Development Financial Institutions (CDFI) Fund in 1994, is a CDFI-certified intermediary, and a permanent member of the national CDFI Coalition.