Automate 1071 Compliance with End-to-End Lending Software
Meet the new requirements for small business lending data collection and reporting as mandated by the Consumer Financial Protection Bureau (CFPB) in its 1071 Small Business Rule.
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Regulation 1017 & Key Deadlines
Section 1071 of the Dodd-Frank Act requires lenders to collect and report data on small business credit applications.
Its goal is to promote transparency and prevent discriminatory lending practices based on race, ethnicity, gender, and more.
For financial institutions, this means implementing new data collection systems and maintaining compliance to avoid regulatory penalties.
Lenders should ensure they have systems in place before these dates:
- Large lenders (at least 2,500 small business loan originations covered in both 2022 and 2023, or both 2023 and 2024): Compliance begins July 18, 2025
- Mid-sized lenders (originating 500-2,499 loans): Compliance begins January 16, 2026
- Smaller lenders (originating 100-499 loans): Compliance begins October 18, 2026
Regulation 1071 Introduces New Requirements for Lenders
Each of the following points represents a significant challenge for financial institutions, requiring careful planning, substantial resources, and ongoing effort.
Failure to meet these compliance requirements could result in penalties and enforcement actions.
1. Extensive Data Collection
The new small business loan requirements significantly expand data collection, including sensitive demographic details about business owners.
Financial institutions need to:
- Update forms and processes to capture required data
- Train staff on proper data collection
- Implement secure data storage
- Address customer privacy concerns
- Maintain efficient application timelines
2. Fair Lending Concerns
Access to demographic data raises risks of unconscious bias affecting loan decisions.
Key challenges:
- Implementing ‘firewall’ procedures to separate demographic data from underwriting processes
- Train staff for objective loan decision-making
- Create clear, consistent loan approval criteria
- Monitor lending patterns for any unintended disparities
- Prepare for increased regulatory oversight
3. Reporting Accuracy
Regulation 1071 raises stakes for data accuracy, with errors risking penalties and reputation damage.
Lenders must address:
- Implement rigorous data validation processes to ensure accuracy
- Create reliable, error-free data aggregation processes
- Set up internal audit processes to catch and correct errors
- Monitor reporting requirements
- Manage compliance workload
- Prepare for regulatory audits and inquiries
4. Resource Allocation
Implementing the new processes required for Regulation 1071 compliance demands a significant investment of both time and financial resources.
Key resource demands:
- Upgrade or replace IT systems for new data requirements
- Hire and train specialized compliance staff
- Develop comprehensive employee training programs
- Engage legal experts for regulatory guidance
- Implement ongoing monitoring and audit processes
- Restructure lending departments as needed
- Dedicate management time for oversight and implementation
5. Data Security
The collection of sensitive demographic data increases the need for robust data protection, essential for both compliance and customer trust.
Financial institutions need to:
- Update cybersecurity measures to protect sensitive demographic data
- Develop and enforce data access controls across all organizational levels
- Create and maintain data breach response plans
- Traind the staff on data security practices and customer information protection
- Manage reputational risks from potential data breaches
Meet CFPB 1071 Regulation Requirements with TurnKey Lender's Integrated Solution
See how TurnKey Lender addresses regulation 1071 challenges for lenders.
Our system prompts loan officers to collect all required data points during the application process, reducing the risk of missing information.
These include:
- Borrower demographics (race, ethnicity, sex, etc.)
- Business type and size
- Loan purpose and amount
- Loan decision and pricing information
- Geographic location
- Discouragement data, and more.
TurnKey Lender comes with built-in checks to ensure data accuracy and completeness for data validation, minimizing errors during collection.
The “firewall” functionality helps prevent loan officers and underwriters from accessing demographic data during the underwriting process.
The platform also includes robust security measures to protect sensitive borrower information in compliance with data privacy regulations.
An in-depth reporting system for Regulation 1071 compliance integrates standardized CFPB-compliant reporting with customizable ad-hoc analysis capabilities.
You can also run trend analysis to track changes in lending patterns over time.
Our impact analysis tools employ statistical methods to identify potential discriminatory practices.
TurnKey Lender solution for 1071 incorporates discouragement tracking mechanisms. They help identify and document potential instances where applicants may have been discouraged from applying for loans.
Automatically generated 1071 compliant adverse action notices ensure timely and accurate communication with applicants whose requests are denied.
Comprehensive audit trail meticulously records all loan application activities. This provides a reliable source of information for internal reviews, regulatory examinations, and demonstrating ongoing compliance efforts.
TurnKey Lender solution is flexible and seamlessly integrates with existing bank systems (core banking, CRM, etc.) for streamlined data flow and reduced manual effort. It is also set up so that it can adapt to future regulatory changes and CFPB updates to 1071 requirements.
Why TurnKey Lender?
Our platform not only ensures compliance but also enhances your overall lending operations.
Here’s why financial institutions are turning to TurnKey Lender to meet their Regulation 1071 requirements and beyond.
TurnKey Lender was selected as top software choices for SME lenders based on banking capabilities typically required for SMEs and ease-of- use.
Gartner featured TurnKey Lender in a recent report researching automation use cases aimed at modernizing loan origination and improving lending processes.
The Everest Group announced that the TurnKey Lender Loan Origination Software (LOS) leads the market in terms of market vision and capability.
According to a performance test by Hewlett Packard, TurnKey Lender is a flexible configuration choice on a highly scalable and reliable infrastructure.
Competing in one of the most challenging categories, TurnKey Lender has been selected as the winner of the New Product Innovation Award.
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FAQs
Q:
Does TurnKey Lender's automated data capture system ensure we're collecting all required data points for each small business loan application?
A:
Our loan origination system captures all the necessary data based on the 1071 regulation, including: borrower demographics (race, ethnicity, sex, etc.), business type and size, loan purpose and amount, loan decision and pricing information, geographic location, and discouragement data.
Q:
How does TurnKey Lender's reporting system assist in preparing the required annual reports for submission to the CFPB?
A:
TurnKey Lender’s reporting system streamlines the preparation of annual reports for CFPB submission. It generates standardized reports in the required format, while also offering customizable options for in-depth analysis of lending patterns. The system’s trend analysis tools track changes over time, and its disparate impact analysis feature helps identify potential discriminatory practices.
Q:
Does TurnKey Lender's platform include features to help us track and document potential instances of applicant discouragement?
A:
Yes. Our solution comes with discouragement tracking feature – a mechanism to capture and record instances of potential discouragement during the application process.
Q:
How does TurnKey Lender ensure data security?
A:
TurnKey Lender is committed to protecting our clients and their data. The company’s information security policy exceeds regulatory requirements for data security going above industry standards and best practices. TurnKey Lender has SOC2 Type II compliance reports and the globally-recognized ISO 27001 Certification. Learn more on our security page.
Q:
Can TurnKey Lender integrate with our existing systems?
A:
Yes. Apart from 75+ preconfigured integrations, and 20+ compatible banking systems, our loan management platform includes an API Client to integrate with your own tools for seamless and efficient lending process, end-to-end. You can learn more here.
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Let us show you how TurnKey Lender can help your institution prepare for Regulation 1071 while improving your overall lending operations.