VIDEO: CFPB's Nov 2025 Proposed Changes to the 1071 Rule

In this Compliance Clip, Adam provides a high-level overview of the CFPB’s November 2025 proposed revisions to the Section 1071 small business data collection rule. While the proposal signals a significant shift from the March 2023 final rule, key details remain unsettled and could have meaningful implications for financial institutions. Watch the video as Adam briefly discusses what’s changing, what’s still uncertain, and why these proposed revisions deserve close attention.

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Video Transcript

The following is a transcript of this video.

This Compliance Clip is going to talk about the CFPB's November 2025 proposed changes to its March 2023 1071 final rule.

Now, again, this is a proposed rule, so it's not final and things are probably going to change, but I decided to release a discussion on this because I feel there are quite a bit of potential changes for financial institutions we need to make sure you're aware of.

So, what I want to do in this Compliance Clip is just give you a quick executive summary of what's happened in these proposed changes to really gut the 1071 rule that was released as a final rule under the prior CFPB administration back in March of 2023.

So, this occurred on November 13, 2025, when the CFPB issued proposed revisions to the provisions of the new Subpart B of Regulation B - that's where this 1071 small business data collection and reporting rule is going to be housed. It's going to be housed in Subpart B of Regulation B, where existing Regulation B is going to be housed in a new Subpart A. They're taking existing Regulation B, calling it Subpart A. The new Subpart B is going to be this new small business data collection and reporting rule. That's a lot like HMDA for small businesses.

And so there are a couple of key changes, and, of course, this is a Compliance Clip, I'm supposed to keep these at three to five minutes. We're probably going to be longer for this video, but just at a very high level, there are some key changes in the proposed rule that would alter the final rule. Now, again, this is a proposal. There's a chance that the final rule that they implement based off this proposal will not be the same, but this is the direction that the current administration of the CFPB is wanting to head.

So, here are the key changes from this November 2025 final rule. First and foremost, they're looking to change what is a covered credit transaction. The CFPB believes that the initial iterations of data collection under the rule should focus on core, widely used lending products. So, they're trying to change the scope just a bit. Therefore, the CFPB is proposing to exclude merchant cash advances as well as ag loans and small-dollar loans from the definition of a covered credit transaction.

So, for those of you who are ag lenders, this would potentially have a big effect on you to reduce the number of covered credit transactions for your accounting to determine if you meet the threshold for reporting under 1071.

The second thing they're looking to do is really huge. So, they're looking to change the definition of a covered financial institution. And what they've said they're trying to do is focus on the larger core lenders, where the majority of loans occur, and eliminate the burden for smaller lenders that lend less in the small business lending world. And so, what they're proposing are two changes. The main change that they're proposing is to change the origination threshold, which is what you count to determine if you're subject to 1071 reporting. They're looking to change that from 100 to 1,000 covered credit transactions in each of the two consecutive years. And so, this is something that I was really shocked by.

In fact, right before the proposed rule was released in the last week of October, I was talking about what it could change to. I thought the current administration would increase the origination threshold from 100 up, but I joked - I tried to pick a number that was so far out there that it would be funny, and I picked 1,000. The joke didn't really hit. It was a really poor joke, but for those of us who geek out, it might have been, you know, worth laughing a little bit. And then I felt immediately obligated to say, “Don't tell anybody I said that, it's probably not going to happen,” and sure enough, I was predicting the future and I didn't even realize it. So, I'm starting a business as a psychic, just kidding, that's not happening! But I was right.

And so, I thought it was crazy. So, at the end of the day, though, I don't know that this will be the actual number we land on, and I discussed that in a lot more detail in our Winter 2026 Quarterly Compliance Update, and we actually have a standalone program. You can buy just part two of that program that talks about 1071, and I'll explain that in just a minute, but if you want to take a deeper dive, there are some options there.

But I don't know that we'll end up with 1,000, but again, this is really just speculation because it's a proposed rule, not a final rule. So, it'd be interesting to see where this lands.

The other thing the CFPB is looking to do in their 1071 proposal is they're looking at changing the gross annual revenue threshold from the rules definition of small business. So how they define a small business currently under the last final rule is 5 million or less in gross annual revenues, but they're looking at reducing that down to a million or less. And in their proposed rule, they're considering other amounts, too, that might be more appropriate, like 3 million, 2 million, or maybe 500,000.

And so, I don't think that this is locked in - it's not - it's a proposed rule. We'll see what happens when we get to the final rule.

The other thing they're looking to do is pull back on the data points that are being collected and required as part of this new rule under Subpart B of Regulation B, so they're looking to pull back and remove some discretionary data points that the CFPB had included under Subpart B under their authority to implement this rule, and this relates to discretional data points for application method, application recipient, denial reasons, pricing information, and the number of workers of the business. So, looking at pulling that back.

They're also going to make some changes to the time and manner of data collection, they're adjusting the compliance dates, they're kicking the can down the road even further, and pushing it back to January 1, 2028. Now again, that's proposed. The current rule has Tier 1 reporters starting in the summer of 2026 for their compliance date, so, if we don't have a final rule by then, they need to either kick the can down the road again, or they're going to have to, start collecting under the prior rule that's currently in effect.

In addition, the CFPB is addressing a couple of other things, like privacy and data publication, and the grace period provision, and the 2023 final rule.

Now, comments on this were accepted until December 15, 2025, so we're in the waiting period at this point, waiting for this final rule to be released. We'll see when that is.

Since they kicked the can down the road on the compliance dates to December 2026, I fully expect we will have some sort of activity by then. It'll be interesting to see how and when they roll this out. Oftentimes, it takes a year to have a final rule after a proposal closed, but I know the current administration has been on a streamlined process, trying to get some things done, trying to shutter the CFPB. And, so they're trying to move things along, the process may have slowed down. And so it'll be interesting to see when the timing of this final rule comes out.

Now, I mentioned that we do have a class on this. If you want more information to take a deeper dive into this 1071 proposal without reading the entire thing yourself, we did release a class. That class is part of our Winter 2026 Quarterly Compliance Update, but it's also a standalone program. So our Winter 2026 Quarterly Compliance Update covers all regulatory activity from the fourth quarter of 2026, including BSA, HMDA, CRA, and all the miscellaneous agency activity. That program is about four hours long.

If you want a more executive summary style, we have our part two of that program we're selling as a standalone product in our store. It's our 1071 Update, the November 2025 Proposed Rule. The goal of this program is to provide a high-level overview of the proposal. We're not going into all the details, but it's definitely a deeper dive than what I just covered in this video. So, if you haven't looked at it yet, this might be a good resource for you to get up to speed with what's happening.

Hopefully, this is informative for you. Until our next compliance clip, I hope you have a great day.