Small LENDER Act

Section 704B of the Equal Credit Opportunity Act (15 U.S.C. 1691c–2) is amended—

(1) in subsection ( g), c)— (A) by adding striking at Any the applicant end and inserting the following:

[Inserted into the law:

( 4 1 ) Compliance with covered rule. (A) In general. With Any respect to the covered rule, the Bureau shall provide a financial institution a 3-year period beginning on the date the covered rule was issued to comply with the rule. (B) Safe harbor. After the end of the 3-year period described under subparagraph (A), the Bureau shall provide a 2-year safe harbor to a financial institution during which the financial institution is required to comply with the covered rule but is not subject to any penalties for failure to comply with the covered rule. (C) Covered rule defined. In this paragraph, the term covered rule means the final rule of the Bureau titled Small Business Lending Under the Equal Credit Opportunity Act (Regulation B) (88 Fed. Reg. 35150, published May 31, 2023). applicant

… 2 unchanged passages …

( 2 B ) in by subsection striking (h)— the (A) period by at striking the paragraph end (1) and inserting the following:

[Inserted into the law:

(1) , Financial and the financial institution . The may, term when financial requesting institution such means information, inform the applicant in writing that — (A) any the partnership, Bureau company, of corporation, Consumer association Financial (incorporated Protection or requires unincorporated), the trust financial institution to ask , estate collect , cooperative and organization, report or such other information entity to that the engages Federal in Government any annually financial pursuant activity to this section ; (B) the applicant is not required to provide such information; and ( B C ) in the each applicant’s response will not affect the financial institution’s evaluation of the previous request for credit. ( 2 ) calendar Model years form. originated The not Director less of than the 500 Bureau credit of transactions Consumer for Financial small Protection businesses shall establish a model form to be used in providing the information required to be provided to an applicant under paragraph (1). Such form shall— (A) be in plain English; and (B) to the extent practicable, be no longer than a single page .

]

(2) by striking subsection (d);

(3) by redesignating subsections (e), (f), (g), and (h) as subsections (d), (e), (f), and (g), respectively; and

(4) in subsection (d), as so redesignated—

(A) in paragraph (2)—

(i) by striking subparagraphs (C), (G), and (H);

(ii) by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively;

(iii) in subparagraph (D), as so redesignated, by adding and at the end; and

(iv) in subparagraph (E), as so redesignated, by striking the semicolon and inserting a period;

(B) in paragraph (3), by striking paragraph (1)(E) and inserting paragraph (1)(D); and

(C) by adding at the end the following:

[Inserted into the law:

(5) Prohibition on information not reported by an applicant. A financial institution may not compile and maintain information described under subsection (b) that was determined by the financial institution using visual observation or any other manner other than being provided by an applicant.

]

(5) in subsection (f), as so redesignated, by adding at the end the following:

[Inserted into the law:

(4) Initial compliance date.

(A) In general. The Bureau may not require a financial institution to comply with this section, or any rule issued under this section, until June 1, 2031.

(B) Safe harbor. The Bureau may not enforce compliance with the requirements of this section during the 2-year period beginning on the date described in subparagraph (A).

(5) Exemption for small financial institutions. A financial institution is exempt from the requirements of this section if the financial institution—

(A) in each of the 2 previous calendar years, originated less than 2,500 credit transactions for small businesses; or

(B) has less than $10,000,000,000 in assets.

(6) Treatment of response rate. The percentage of applicants providing a financial institution with the information described under subsection (b) may not be used as a factor in determining whether a financial institution is in compliance with the requirements under this section.

]

; and

( B 6 ) in subsection (g), as so redesignated, by striking paragraph (2) and inserting the following:

… 3 unchanged passages …