Greenlining Institute Supports Section 1071 of Dodd-Frank Wall Street Reform, Consumer Protection Act
Contact: Leonna Spilman, Greenlining Institute Communications Coordinator, 442-999-1505 (cell)
OAKLAND, CALIFORNIA – On September 14th, The Greenlining Institute submitted a letter to the Consumer Financial Protection Bureau, along with 33 nonprofits, Chambers of Commerce, and business associations, strongly urging the CFPB to implement Section 1071 of the Dodd-Frank Wall Street Reform Act.
The rule would require financial institutions to compile, maintain, and report critical information about small business lending activity including an applicant’s race, ethnicity, and gender. Section 1071 will be critical in ensuring fair access to capital for small, women- and minority-owned businesses.
Research shows that credit denial rates for entrepreneurs of color – especially for Blacks and Latinos – and women are disproportionately higher than those of their white and male counterparts, even after controlling for variables such as business credit scores, personal wealth, and revenue. Ample research also finds that even when minority entrepreneurs do succeed in securing financing, they receive smaller loans and pay higher interest rates than their white counterparts, again, even after controlling for differences in creditworthiness.
“Small business loan data transparency is critical to ensuring entrepreneurs of color, women entrepreneurs, and small businesses will be empowered to achieve their immense potential when they have access to the capital they need. As a barometer of market conditions in small business finance, Greenlining believes Section 1071 will be instrumental in identifying discrepancies in lending and addressing the unique credit needs of entrepreneurs of color, women entrepreneurs, and small businesses.”