CFPB Reaffirms Excluding Merchant Cash Advances From Section 1071

The CFPB recently published its annual Fair Lending Report. Under the section about small businesses, it reaffirmed its decision to exclude MCAs from the Section 1071 rule.

On May 1, 2026, the CFPB issued the final rule. The rule reduces the scope of “covered credit transactions” by limiting the types of transactions subject to reporting in order to focus data collection efforts on core lending products—loans, lines of credit, and credit cards—that are most utilized by small businesses. Accordingly, the rule sets forth certain exclusions: merchant cash advances, agricultural lending, and small-dollar business credit.

It further reiterated its decision to make other modifications to Section 1071.

In addition, the rule revises the definition of “small business” by reducing the gross annual revenue threshold from $5 million to $1 million. This will allow the CFPB to focus on collecting data related to micro and small enterprises, which are most relevant to section 1071’s goals. The rule also reduces the number of collected data points, extends and adopts a uniform compliance date of January 1, 2028, and simplifies the time and manner of data collection in order to allowinstitutions flexibility in how they comply with statutory requirements.

The rule updates are necessary to ensure reasonable implementation that does not restrict credit availability for America’s small businesses. The 2023 rule imposed a significant number of requirements that were not needed to advance the purposes of section 1071 of the Dodd-FrankAct. This rule recognizes those concerns and takes a more reflective approach, including just what the statute requires. The updates will result in cost savings for institutions and reduce the burden of data collection without sacrificing data availability.

The full CFPB report can be viewed here.