Worcester Business Journal

12 Worcester Business Journal | February 19, 2024 | wbjournal.com in Worcester. "ere's always going to be a thought in the back of my mind like, 'What are you going to do with that data?'" Legal issue delaying rollout For all covered financial institutions, the CFPB compliance dates for the rule have been delayed due to legal challenges in Texas and Kentucky. Both district courts have issued preliminary injunctions against the data collection rule pend- ing the outcome of a separate U.S. Supreme Court case regarding the CFPB's appeal against a ruling that declared its funding unconstitutional. Banks are updating so- ware and training staff in an- ticipation of the rule's implementation, said Tom Callahan, executive director of the Partnership for Financial Equity, a coalition of Mass. financial institutions and community groups. "e banks that we work with most e new rule from the Consumer Financial Protection Bureau requires lenders who make at least 100 business loans a year to collect the race, gender, and other demographic information of applicants, similar to data collected on people applying for mortgages. By col- lecting the data, the thinking goes areas of discrimination could be identified and addressed. While generally supportive of the new rule, the lending industry is concerned about the onus the new require- ments put on banks as well as small business loan appli- cants, who may be intimi- dated by the amount of data they need to provide. "If I'm applying for a loan and you're asking for a lot of information from me, I might be resistant at first be- cause I've never been asked that before," said Tom Herald, Central Massachusetts regional director for the Small Business Development Center at Clark University e lending industry is preparing for new reporting requirements meant to identify discrimination in small business loan application, as legal obstacles slow the rollout PHOTO | EDD COTE Reporting DISCRIMINATION BY CICI YONGSHI YU Special to WBJ I n an effort to identify and elim- inate discrimination in small business lending, Central Massa- chusetts banks and other lenders are preparing for new federal reporting requirements for business loan applications, while monitoring the outcome of the ongoing lawsuits surrounding the rule. "Minority-owned companies have a history of being turned down by the larger financial institutions," said Darrell Byers, CEO of Interise, a Boston company aiming to help minority and women-owned businesses grow. Darrell Byers, CEO of Interise B A N K I N G & F I N A N C E Tom Herald, Central Massachu- setts regional director for the Small Business Development Center, is concerned the new loan application reporting require- ments may scare away entrepre- neurs from seeking financing.

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