IC Template

CONSUMER FINANCIAL PROTECTION BUREAU
REQUEST FOR APPROVAL UNDER THE GENERIC CLEARANCE
COMPLIANCE COSTS AND OTHER EFFECTS OF REGULATIONS
(OMB Control Number: 3170-0032)
PART A: JUSTIFICATION FOR THE INFORMATION COLLECTION

1. TITLE OF INFORMATION COLLECTION: Small Business Compliance Cost Survey
2. PURPOSE: Under Section 1071 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, the Equal Credit Opportunity Act was amended to require financial institutions,
subject to a regulation to be issued by the Bureau of Consumer Financial Protection (the Bureau),
to compile, maintain, and report to the Bureau certain information about applications for credit
made by women-owned, minority-owned, and small businesses. Section 1071 includes
13statutorily-mandated data points, and permits the Bureau to require additional data points that
would serve the purposes of the section.
The objective of this survey is to solicit, from institutions offering small business credit products
that could potentially be covered by this rule, information about potential one-time costs to
prepare to collect and report data, and also on potential responses to higher compliance costs.
This survey does not cover potential on-going costs from actually collecting and reporting data.
3. DESCRIPTION OF RESPONDENTS: The respondents will be banks, credit unions, nondepositories offering merchant cash advances, = equipment financers (including bank-affiliated,
captive, and independent financers), and other non-depository online lenders.
4. FEDERAL REGISTER NOTICE CITATIONS:
a. 60-day Federal Register Notice
b. 30-day Federal Register Notice

84 FR 26078 Date: 06/05/2019
_85_ FR 85 FR 3036 Date: _01/17/2020___

c. Comments received in response to the 30-day Notice: [X] Yes

[ ] No

d. If yes, summarize the comments and the Bureau’s response to those comments:
The Bureau received 5 comments in response to the 30-day Federal Register notice soliciting
public feedback on this survey. Nearly all of the public comments were in favor of an additional
industry survey aimed at estimating ongoing costs. The Bureau has considered using this method
for ongoing costs, but decided to use other methods to estimate ongoing costs. For this survey,
the Bureau decided that it should be only focused on one-time costs to increase simplicity,
reduce length, and increase the response rate among the relevant institutions.
Independent Community Bankers of America (ICBA) Comment: Most of this comment focused
on broader 1071 commentary and their desire for the CFPB to study costs and benefits as closely
as possible. Their four recommended areas for further analysis specific to the survey included:
Staffing Issues unique to community banks, Adoption of new IT systems and forms, Potential
elimination of “high-touch” relationship underwriting and Consumer re-identification risk. The

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survey already contains questions that address the first two points (Question 10 and Questions
11/12). The third is related to question 17 which deals with institutional responses to the 1071
rulemaking. We included an additional response to this question that gets at the reduction of
high-touch relationship lending as a result of the 1071 rulemaking. The fourth is out of the scope
of the survey instrument and the costs and benefits work more generally and a concern with
regards to consumer privacy. ICBA is generally in favor of further survey collection to help the
Bureau’s consideration of costs and benefits.
Credit Union National Association (CUNA) Comment: This comment encouraged the CFPB to
make sure to engage specifically with Credit Unions, as well as encouraged an ongoing costs
survey and a carve-out of Credit Unions. Other comments related more generally to the
rulemaking that are not applicable to the one-time costs survey. This comment was in favor of
the survey collection.
National Association of Federally-Insured Credit Unions (NAFCU) Comment: A majority of this
comment was out of scope of the 1071 one-time costs survey, including commentary of Credit
Union carve-outs, convening the SBREFA panel, and responsiveness to RFI concerns.
NAFCU’s recommendations that the survey include a question on the benefits of this rulemaking
to credit unions is out of scope of the one-time costs survey. The Bureau is using other analyses
to assess the benefits of the rulemaking. NAFCU also suggested adding a question about passthrough costs in response to the rule. Question 17 allows an opportunity for respondents to share
how they might respond if covered by the rule. Overall, NAFCU’s comment was in favor of the
survey collection and encouraged further survey collections.
Equipment Leasing and Finance Association (ELFA) Comment: Recommended having more
clarity in policy decisions regarding the reporting structure, firewall, and reporting universe prior
to distributing the survey. Providing information on policy decisions would create more
effective one-time cost estimates. This is not possible, however, since the intent of this survey is
to gather information on potential one-time costs that will then help inform policy decisions.
ELFA’s raising of the firewall prompted an addition regarding the reporting structure within the
Background Section allowing the respondents to assume a reporting structure similar to HMDA,
as to better gauge costs.
American Banking Association (ABA) Comment: ABA provided a number of substantive
comments on the design of the survey. Generally, ABA is in favor of this collection and further
surveys aimed at estimating costs for institutions. The below responses to their comments go by
section.
Background: The Bureau had previously held discussions with third-party vendors and did not
glean much relevant information on the potential one-time costs from those conversations,
because they were unable to provide cost estimates without knowing what the rule required.
Thus, we do not believe that surveying these vendors would be currently helpful, however we are
strongly considering softer interviews of third-party vendors to supplement information gathered
from the surveys. Regarding the time spent on the survey--the 30 minutes estimate originally on
the survey is appropriate for smaller institutions. For larger, more complex institutions we feel
that up to five hours is appropriate. We have adjusted the total time spent to reflect an average of
2 hours and the time to complete will depend on the complexity of the institutions. We have also
changed the definition of small business loans to better address the ABA comment regarding
small business financing. Replying to an ABA and ELFA comment on the firewall, the Bureau
decided to exclude any costs related to firewall implementation from the survey. Corresponding
with a different ABA comment, we have added clarity regarding the appropriate definition of an
application in accordance with Regulation B.

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Question 1: The broader suggestions of institution type can be encompassed within the “Other”
option. The suggestion that the respondent provides additional explanation if an institution
selected e, g, or j would result in increased difficulties in interpretation of these explanations that
would not be easy to incorporate in the results. The Bureau did agree with the ABA suggestion
regarding “select all that apply” in order to accommodate the complex nature of certain financial
institutions. We have also eliminated the institution focused on offering factoring option in order
to better correspond with the ABA comment.
Question 2: To address ABA’s comment about giving respondents the option of choosing a $1
million revenue threshold, we added text boxes accompanying the “other” categories to allow
respondents to specific and the levels of these definitions. Additionally, we decided against
eliminating the “any other single definition that would allow you to respond” language as we
believe that this allows the maximum response rate for institutions, however the Other category
encompasses a wide range of definitions that financial institutions utilize. We also added the
reference to the appendix that ABA suggested for total exposure.
On Question 3: We added the same description of small business financing that is included
within the Background Section.
Question 4: To address this comment we added a portion of the Background “for purposes of
this survey please assume the Regulation B definition of an application” from the Background
Section that clarifies this comment.
Question 7: We have provided definitions for the level of automation that we believe reasonably
explain the confusion in differentiating between the levels of automation. We did not take the
suggestion regarding estimates on the number of systems that would be impacted by the 1071
data collection. Utilizing this additional information to estimate costs would be dependent on the
complexity of the system and labor costs and we believe would be better estimated within
question 12.
Question 10: We have added additional explanations for each of these tasks in line with the
suggestion by ABA.
4. TYPE OF COLLECTION (ADMINISTRATION OF THE INSTRUMENT):
a.

How will you collect the information? (Check all that apply)
[X] Web-based or other forms of Social Media
[ ] In-person
[ ] Small Discussion Group
[ ] Other, Explain ______________________

[] Telephone
[ ] Mail
[ ] Focus Group

b. Will interviewers or facilitators be used?
[] Yes [X ] No [ ] Not Applicable

5. PERSONALLY IDENTIFIABLE INFORMATION:
a. Is personally identifiable information (PII) collected? [X] Yes [ ] No

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b. If Yes, is the information that will be collected included in records that are subject
to the Privacy Act of 1974? [X] Yes [ ] No [ ] Not Applicable
If applicable, what is the link to the Privacy Impact Assessment (PIA)?
https://files.consumerfinance.gov/f/documents/20161101_cfpb_Industry_Expert_Commu
nity_Input_and_Engagement_PIA.pdf
c. If Applicable, has a System or Records Notice (SORN) been published?
[X] Yes [ ] No [ ] Not Applicable
If yes, cite the SORN: CFPB 22 Market and Consumer Research Records (83 FR 23435)

6. INCENTIVES:
a. Is an incentive provided to participants? [ ] Yes [X] No
b. If Yes, provide the amount or value of the incentive? $__N/A__.
c. If Yes, provide a statement justifying the use and amount of the incentive.
__N/A__.
7. BURDEN HOURS
Collection of
Number of
Information Respondents
Electronic Survey Form

120

Responses per
Respondent
(Frequency)
1

Number of
Responses
120

Participation
Time
(hours)
2

8. FEDERAL COST: There will be no federal costs associated with this data collection. The
survey is being developed and will be conducted using existing Bureau staff and resources.
Therefore, this collection of information will not result in any new costs to the Bureau.

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Burden
Hours
240

PART B: COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL
METHODS OR CONDUCTING A SURVEY OF FOCUS GROUP

If you are conducting a focus group, survey, or plan to employ statistical methods, please
provide answers to the following questions:

1. RESPONDENT UNIVERSE AND SELECTION METHODS
a. Do you have a customer list or something similar that defines the universe of
potential respondents and do you have a sampling plan for selecting from this
universe?
[ ] Yes
[X] No
b. If the answer is Yes, please provide a description below (or attach the sampling
plan). If the answer is No, please provide a description of how you plan to identify
your potential group of respondents and how you will select them.
The Bureau has divided the universe of potential institutions covered under Section 1071
into six different groups: banks, credit unions, non-depositories offering merchant cash
advances, equipment financers (including bank-affiliated, captive, and independent
financers), and other non-depository online lenders. The Bureau will identify potential
respondents by contacting trade organizations representing institutions within each of
these groups. While we have access to lists of institutions for banks and credit unions and
some information about the products they offer, this information is not complete.
c. The selection of your targeted respondents. Provide a description of how you plan
to identify your potential group of respondents and how you will select them.
The Bureau will request data from around 120 institutions in each of the six groups,
targeting small, medium, and large respondents (based on number of small business loans
originated per year) within each group. The Bureau expects a response rate of around
20%. This estimate is based on RMR’s judgment from past collections that included
relatively small participants.
Although the Bureau will not be contacting a representative sample of small business
lenders, the target response rate represents a reasonable target for social science research.
2. INFORMATION COLLECTION PROCEDURES
The Bureau will be sending selected small business lenders a letter requesting a participation
decision. The request will also be accompanied by a letter from the Bureau signed by the
research team lead describing the survey’s purpose. Respondents will provide data to the Bureau
electronically or through interviews (conducted by phone or video conference).

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The Bureau will not use the provided data to make statistical claims about the small business
lending market, but will aggregate selected responses and present descriptive statistics attributed
to small business lenders that responded to the Bureau’s data request.
3. METHODS TO MAXIMIZE RESPONSE RATES AND ADDRESS ISSUES OF NONRESPONSE
The Bureau held preliminary calls with several small business lenders and trade groups in
connection with designing the questionnaire and gauging the burden of answering it. Based on
these conversations, the Bureau believes that it has minimized potential burden on small business
lenders in an effort to maximize the rate at which they respond to the survey.
The Bureau does not believe that this information collection will result in a representative sample
of all small business lenders. As in previous rulemakings, the Bureau is prepared to aggregate all
voluntarily shared data with the qualification that the data only reflect firms that voluntarily
provided information to the Bureau. This information collection will inform, but not serve as the
sole source of information on the rulemaking to implement Section 1071.
4. TESTING OF PROCEDURES OR METHODS
The Bureau held informal, unstructured calls with several lenders and trade groups regarding the
potential data request. Lenders generally said they could offer these data with a small amount of
burden. In addition, the Bureau tested the survey instrument with seven institutions. The test
consisted of both electronic surveys and phone calls with lenders. Test results informed changes
the Bureau made to an initial draft of the survey. The Bureau received comments from five trade
associations and modified the survey instrument to make it easier for their members to respond.
In general, the Bureau has found that small business lenders are willing and able to produce data
to help inform the Section 1071 rulemaking.
5. CONTACT INFORMATION FOR STATISTICAL ASPECTS OF THE DESIGN
Jason Dietrich, PhD.
Acting Section Chief, Office of Research
Bureau of Consumer Financial Protection
[email protected]

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PART C: CERTIFICATIONS
CERTIFICATION PURSUANT TO 5 CFR 1320.9, AND THE RELATED PROVISIONS
OF 5 CFR 1320.8(b)(3):
By submitting this document, the Bureau certifies the following to be true:
(a) It is necessary for the proper performance of agency functions;
(b) It avoids unnecessary duplication;
(c) It uses plain, coherent, and unambiguous terminology that is understandable to
respondents;
(d) Its implementation will be consistent and compatible with current reporting and
recordkeeping practices;
(e) It indicates the retention period for recordkeeping requirements;
(f) It informs respondents of the information called for under 5 CFR 1320.8(b)(3):
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
(g) It was developed by an office that has planned and allocated resources for the efficient
and effective management and use of the information to be collected;
(h) It uses effective and efficient statistical survey methodology; and
(i) It makes appropriate use of information technology.
CERTIFICATION FOR INFORMATION COLLECTIONS SUBMITTED UNDER THIS
GENERIC INFORMATION COLLECTION PLAN
By submitting this document, the Bureau certifies the following to be true:
 The collection is voluntary.
 The collection is low-burden for respondents and low-cost for the Federal Government.
 The collection is non-controversial and does not raise issues of concern to other federal
agencies.
 Information gathered will not be used solely for the purpose of substantially informing
influential policy decisions.
 The collection is targeted to the solicitation of opinions from respondents who have
experience with the program or may have experience with the program in the future.
 The results will not be used to measure regulatory compliance or for program evaluation.

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