For those of us in the equipment finance sector, the battle over the CFPB’s Section 1071 rule wasn’t just about burdensome paperwork. It was about standing up for the ability of small businesses to access capital without being tangled in unnecessary federal red tape. After years of coordinated pushback, legislative engagement, and a little help from the courts, the CFPB recently announced it would be reproposing its controversial 1071 rule. The icing on the cake? Legislation repealing Section 1071 has started moving in the House and is gaining momentum in the Senate. Make no mistake: these are major wins for our industry and the small business customers we serve.
Let’s rewind. Section 1071 of the Dodd-Frank Act mandated that the CFPB collect demographic data on small business loan applications in the name of preventing discrimination and collecting information about how to better serve underserved communities. A noble intent perhaps but when the Bureau finalized its rule in 2023, the reality quickly became clear: this was regulatory overreach disguised as civil rights enforcement. The data collection requirements were not only excessive—they were unworkable. The sheer volume of data fields, the subjectivity of self-reported demographic info, and the scope of the rule would have created enormous compliance costs for lenders of all sizes, especially independent and smaller finance companies.
Our association took immediate and aggressive action. We weren’t just watching from the sidelines—we stepped directly into the arena. ELFA joined the lawsuit as a plaintiff in Texas Bankers Association v. CFPB, making clear that the 1071 rule posed an existential threat to efficient credit access for small businesses. At the same time, we worked Capitol Hill, engaged our members, and partnered with allies across the financial sector to shine a spotlight on the rule’s overreach. Through member testimony, data, and persistent advocacy, we illustrated how this rule would stifle lending rather than support it.
The turning point came when the political winds shifted. With a change in administration, the CFPB—now under the Trump administration—chose not to defend the rule and declined to oppose the plaintiffs’ motion for a stay. The court was left with little choice but to stay the rule’s implementation for the duration of the case. It was a major procedural win for ELFA and our co-plaintiffs and signaled that the 1071 rule had lost critical support at the federal level. From there, the CFPB’s withdrawal became less a question of “if” and more of “when.”
Still, regulatory agencies don’t often walk back finalized rules, so when the CFPB formally indicated their intention to repropose the 1071 rule in early April, it was a rare and remarkable moment. It validated what we’ve said all along: that this rule was deeply flawed and out of touch with the realities of how commercial finance operates. It also proved the power of collective advocacy. Industry voices, legal action, and sustained pressure worked.
The lesson for policymakers? Engage with industry early and often. Understand the operational consequences of the rules you draft. And maybe, just maybe, remember that small businesses need access to capital more than they need another federal reporting form.
The next steps aren’t 100% clear at this point, but what is certain is that the combination of the court ordered stay and the CFPB’s stated intention to withdraw the rule allows ELFA member companies to go pencils down on compliance. The Trump administration CFPB leadership has made it clear that should legislative efforts to repeal the rule not reach the finish line, any rule implementing Section 1071 will be dramatically scaled back from the version issued under prior CFPB leadership.
ELFA isn’t resting on our laurels though, we are going to be engaged through this regulatory process while also pushing for the repeal legislation in both chambers of Congress. If you want to get involved in the process, please let us know!