It’s here! The much anticipated and long awaited final Small Business LAR rule has been released!
Rest assured TCA’s Small Business LAR Action Team (SBLAT) is on it. We’re working through the Final Rule to help you implement the new policies and procedures necessary to comply with the rule. Look for more articles from TCA about how to approach this implementation project.
Your first step should be to determine if your bank will be required to report. The threshold is easy to meet but might take some effort to determine.
Financial institutions as well as other non-bank lenders will be subject to the reporting rule if they made 100 or more covered loans in the preceding two calendar years. A covered loan is a loan for business purpose to a business with gross annual revenues of less than $5 million annually in its most recent fiscal year.
The effective date of the rule is 90 days after publication in the Federal Register with implementation to be staggered or tiered based on small business lending.
- Tier 1 – Lenders that originate at least 2,500 covered loans annually must begin data collection October 1, 2024. Data must be reported by June 1, 2025.
- Tier 2 – Lenders that originate at least 500 covered loans must begin data collection April 1, 2025. Data must be reported by June 1, 2026.
- Tier 3 – Lenders that originate at least 100 covered loans must begin data collection January 1, 2026. Data must be reported by June 1, 2027.
- Lenders originating less than 100 loans per year will still be required to follow Fair Lending laws.
Hopefully you’ve been meeting with the various stakeholders at your bank and have a rough project plan in place. If not, it’s time to start those meetings and develop an in-depth implementation plan.
As always, we are here to help! TCA is “A Better Way” to help you comply with the Small Business LAR.
