Banks must now collect race and gender data on small business loan applicants

The US financial watchdog finalized rules requiring banks to collect detailed demographic data from small business loan applicants. This means lenders must now report information like race, gender, and ethnicity for every application, allowing regulators to track lending patterns.

For years, regulators could only investigate fair lending complaints after they happened. Now, they will have a clear picture of who is getting loans and who is being denied, across thousands of lenders. This data will make it much easier to spot systemic discrimination in small business lending, potentially leading to more enforcement actions and a shift in how banks approach these loans.