Small LENDER Act Small Lenders Exempt from New Data and Excessive Reporting Act
Impact
The implications of HB1806 on state laws include a shift in how small business lending will be monitored and reported. By granting a three-year compliance period followed by a two-year safe harbor for newly issued regulations, the bill seeks to offer a more flexible regulatory environment for small businesses and lenders. Small financial institutions, defined under the bill as those originating at least 500 small business loans yearly with total revenues not exceeding $1,000,000, will benefit significantly, as this adjustment can allow them to operate with less administrative burden related to data processing and compliance.
Summary
House Bill 1806, known as the Small Lenders Exempt from New Data and Excessive Reporting Act, aims to amend the Equal Credit Opportunity Act, specifically targeting the requirements related to small business loan data collection. The bill proposes changes that will give financial institutions an extended timeframe to comply with new rules or guidance issued by regulatory bodies regarding data collection from small business loans. This measure is intended to ease the regulatory burden on smaller lenders, allowing them to adapt more effectively to compliance demands without facing immediate penalties.
Contention
Notable points of contention surrounding HB1806 stem from concerns about potential risks in transparency and accountability within small business lending. Critics of the legislation argue that by providing longer compliance periods and safe harbor provisions, it may hinder efforts to collect comprehensive data regarding small business loans. This situation could undermine efforts to ensure equitable lending practices, as less stringent data collection might obscure patterns of discrimination or inequality in lending opportunities for smaller enterprises. Proponents, however, contend that this bill is a necessary step to ensure that smaller lenders can remain viable and competitive in a heavily regulated market.