PROTECTING PERSONAL DATA
If you are a business in the financial industry and you are defined as a Lendor, you are required to collect small demographic information from borrowers.
Data Collection Requirements for Lenders
The Consumer Financial Protection Bureau (CFPB) also introduced a rule that indirectly impacts small businesses. Lenders are now required to collect demographic data on small business borrowers, including race, gender, and business size.
Here is a breakdown of the rule:
2. Who’s Impacted?
While the rule is directed at lenders, it impacts small businesses because lenders will require this information during the loan application process.
2. Why Does It Matter?
The rule aims to promote fair lending practices and transparency.
3. What’s Next?
Understanding this requirement can help you, as a small business owner, better navigate the lending process and prepare your business for questions related to demographic data.
Being aware of this shift allows business owners to anticipate the information lenders will request, which can streamline the financing process.
Demographic information can fall under personal identifiable information. You are required to protect personal identifiable information. You are also required to give consumers and borrowers the opportunity to control the sharing and disclosure of personal identifiable information. If you fall under the lending category in the financial industry, contact us to learn more about your compliance requirements.