On November 12, the Consumer Financial Protection Bureau (CFPB) released its long-awaited Notice of Proposed Rulemaking (NPRM) on Section 1071 of the Dodd-Frank Act. This proposed rule is a true step toward greater clarity for the equipment finance industry and a more favorable approach to policy on Section 1071.

While the Equipment Leasing & Finance Association continues to review the proposal in detail, there are elements in the proposal that stand out and should be highlighted.

Those include:

• A renewed focus on core data points. The NPRM prioritizes the data elements necessary to meet statutory requirements, helping reduce unnecessary complexity.
• A thoughtful definition of “small business,” taking it from $5M in the previous 2023 rulemaking to $1M and under. This will be critical to ensure the rule can be applied effectively and consistently across the market.
• An increase in the exemption threshold. The Bureau has proposed raising the threshold for covered financial institutions from 100 to 1,000 originations annually. Although this is an improvement, ELFA recognizes this is an area where we can recommend an even higher threshold and will work closely with coalition partners to advocate for that change.
• A continued exemption for true leases.
• New exemptions for Farm Credit System (FCS) lenders, merchant cash advances, and loans for agricultural purposes.  
• The new proposal also includes an updated single compliance date of January 1, 2028, providing a clear timeline for institutions to prepare and implement the rule.

ELFA is committed to engaging constructively with the CFPB throughout the rulemaking process. Our goal is to ensure that the final rule strikes the right balance, promoting fair access to credit while preserving the ability of lenders to serve small businesses efficiently and effectively. As we are preparing to submit formal comments and recommendations in the weeks ahead, we look to you for your input and will keep members updated as the process moves forward.

For questions, comments, or to share input, please reach out to Ally Gale, ELFA’s Director of Federal Government Relations, at agale@elfaonline.org.