The International Factoring Association (IFA) announced that after many years of advocating for the factoring community by the American Factoring Association (AFA), the Consumer Financial Protection Bureau (CFPB) has announced that its proposed regulation implementing Section 1071 of the Dodd-Frank Act would not be imposed on the factoring industry, pending final regulation. The AFA will continue to monitor comments submitted to the CFPB and consider appropriate next steps to ensure this victory is retained.
“Until a final regulation is adopted by the CFPB, after a comment period on the proposed regulation, we cannot be guaranteed this exception will be in the final regulation,” Cole Harmonson, president of AFA, said. “We must remain vigilant to ensure small business has access to fairly priced credit and the opportunity to succeed.”
Section 1071 requires the CFPB promulgate regulations mandating lenders to maintain race and gender records relating to the extension of credit to small businesses. Under the proposal, lenders would be required to report the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered. The CFPB determined that Section 1071 should not be applied to factors on the grounds that factors purchase receivables as opposed to extending credit.
“The lifting of this potential regulatory burden is a huge win for the factoring industry and our members,” Bert Goldberg, executive director at IFA, said.