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CFPB DECLARES MERCHANT CASH ADVANCES “CREDIT” UNDER NEW SMALL BUSINESS DATA COLLECTION RULE

Turning away industry commentators, the Consumer Financial Protection Bureau (“CFPB”) has declared merchant cash advances “credit” for purposes of small business data collection under the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691 et seq. (“ECOA”), with potentially important further compliance implications for merchant cash advance providers, many of whom take the position that their merchant cash advances are true “sales” of future accounts receivable, not “credit” per se. See Small Business Lending Data Collection under the Equal Credit Opportunity Act (Regulation B) (consumerfinance.gov) (effective 90 days after date of publication in the Federal Register, with compliance dates for select institutions as early as October 1, 2024); see our Alert of Mar. 28, 2023. Read More