CFPB Small Business Rule Challenged by Revenue Based Finance

The Consumer Financial Protection Bureau exceeded its authority when it imposed data collection and reporting obligations on institutions that provide financing to small businesses in exchange for a percentage of their revenue, a new lawsuit says.

The lawsuit, filed Tuesday by Florida-based nonprofit representing companies that finance small businesses, challenges a CFPB final rule requiring small business lenders to collect and report borrowers’ demographic data. Under the rule, certain lenders that make small business loans must collect race, gender, and other demographic information, similar to data collected for mortgages.

Plaintiff Revenue Based Finance Coalition says the rule improperly sweeps ...