What Actually Counts as a Small Business Loan Under Section 1071

A financial institution is a covered institution under Section 1071 if it originated at least 1,000 covered credit transactions to small businesses in each of the last two calendar years, where a small business is one with gross annual revenue of $1 million or less. Both numbers changed on May 1, 2026, when the CFPB published a reconsideration final rule that raised the origination threshold from 100 and lowered the revenue ceiling from $5 million. If your institution is testing scope against the older figures, the test is wrong, not just outdated.

The rule's definition of a small business, and where the revenue threshold sits

Section 1071 of the Dodd-Frank Act only counts credit extended to a "small business," and the definition is entirely about gross annual revenue: $1 million or less, as of the CFPB's reconsideration final rule (Federal Register document 2026-08494, published May 1, 2026, effective June 30, 2026). Before that rule, the ceiling was $5 million. The change matters twice over. It shrinks the population of applications you would ever report, since a borrower who clears $1 million in revenue falls outside the rule's definition of small business entirely regardless of loan size. And because the origination threshold below counts transactions to small businesses specifically, a lower revenue ceiling also lowers your raw transaction count against that threshold. An institution that looked covered under the $5 million definition may not be covered under the $1 million one, even with no change in lending activity.

Which loan products are covered and which are excluded

Covered credit transactions include term loans, lines of credit, business credit cards and merchant cash advances extended to a small business as defined above. Consumer-purpose credit, even to a business owner personally, is not covered. Trade credit, factoring, leases and public utility credit are excluded by rule. If your institution originates both business and consumer products through the same channel, the scoping question is per transaction, not per borrower or per department.

How to count originations for the 1,000-transaction threshold

Count every covered credit transaction to a small business that you originated, including renewals and refinances of existing credit and draws or advances on an existing line, in each of the two most recently completed calendar years. Denied applications and withdrawn requests do not count toward origination volume, but they still matter once you are in scope, since Section 1071 requires reporting the application, not only the originated loan. Both years have to independently clear 1,000 transactions; a strong year followed by a weak one does not make you covered, and the reverse does not make you exempt.

What data you collect once you are in scope

The May 2026 reconsideration rule reduced the data collection burden along with raising the threshold. It removed application method, application recipient, denial reasons, pricing information and number of workers as discretionary data points. What remains is still substantial: application and credit details, the census tract of the small business's principal place of business, gross annual revenue, NAICS code, time in business, and demographic information about principal owners (ethnicity, race and sex) collected directly from the applicant rather than proxied. If you built a field mapping against the pre-2026 data dictionary, that mapping now collects fields the rule no longer requires and is missing nothing it still does — the removed fields were discretionary, not required, so nothing you were required to collect went away.

Common scoping mistakes in a first collection year

The most common mistake right now is testing scope against a schedule that no longer exists. Guidance published before May 2026 described a phased rollout with separate compliance dates for lenders above 2,500, 500 and 100 originations. That schedule is gone; there is a single compliance date of January 1, 2028 for every institution that remains covered under the current threshold. A related mistake is testing the origination count against the old $5 million revenue definition, which overstates how many of your transactions actually count as small business credit under the current rule. A third: assuming an institution that was covered under the 100-transaction threshold is still covered now. The tenfold increase to 1,000 transactions moves a meaningful number of smaller lenders out of scope entirely, and continuing to build collection infrastructure for a rule that no longer reaches you is effort spent on the wrong problem.

What to do if you are within 10% of a threshold boundary

Keep counting. Falling below 1,000 covered originations in one of the two test years takes you out of scope for that test, but the two-year window rolls forward every year, and an institution sitting between roughly 900 and 1,100 originations can cross in and out of coverage from one year to the next. The practical move if you are anywhere near that band is to keep counting covered originations under the current small business definition even while you are out of scope, so that the year you do cross, you already have two clean years of data behind you instead of a reconstruction project under deadline pressure.

How to test your own portfolio against the definition

Pull your covered credit transactions to businesses at or under $1 million in gross annual revenue for each of your two most recently completed calendar years, including renewals, refinances and line draws, excluding denials and withdrawals from the origination count. If both years clear 1,000, you are covered as of January 1, 2028. Our Section 1071 coverage checker runs this same test in your browser and cites the rule it reads from, so you can check it in a minute rather than building the test yourself.

Once you know where you stand, see how Comply SBL (1071) handles the collection for institutions that are covered, or read our broader Section 1071 in 2026 overview for the fuller compliance picture. Software details are on the Comply SBL (1071) information page.

Sources: CFPB, "Small Business Lending Under the Equal Credit Opportunity Act (Regulation B)," Federal Register document 2026-08494, published May 1, 2026, effective June 30, 2026.