On this page
Section 1071 of Dodd-Frank required lenders to collect and report demographic and pricing data on small business credit applications. For several years the open question in this industry was whether merchant cash advances would be swept in. They have not been.
What the final rule says
| Issued | May 2026, revising the 2023 rule |
| Effective | 30 June 2026 |
| Compliance begins | 1 January 2028 |
| First report due | 1 June 2029 |
| Coverage threshold | 1,000 originations in both 2026 and 2027 |
| Grace period | Calendar 2028, for good-faith data errors |
| MCAs | Excluded from covered credit transactions |
Agricultural lending and small-dollar loans were excluded on the same basis. The Bureau’s stated reasoning for MCAs was structural — that they are built differently from traditional lending products, and that the first round of data collection should concentrate on core lending before widening.
What this actually changes for a broker
Directly, very little, and that is worth saying plainly rather than dressing it up as a win.
- The reporting burden 1071 would have created for MCA originations does not arrive. That was the main federal compliance project on the industry’s horizon and it is off the table for now.
- If you place products other than advances — term loans, lines of credit — those may still be covered, and coverage attaches to the originating institution rather than to you.
- It changes nothing about state disclosure or registration obligations, which are the ones with actual deadlines attached.
Federal relief, state pressure
The two directions are worth holding together, because reading either on its own gives the wrong picture of where this industry is going.
| Federal | State |
|---|---|
| 1071 excludes MCAs | Ten states require commercial financing disclosure |
| No new reporting obligation | Seven states attach broker or provider registration |
| Compliance pushed to 2028 | Texas registration closes 31 December 2026 |
| Scope narrowed | New York extended unfair-practice protections to small businesses in February 2026 |
A broker reading only the federal column would conclude the regulatory tide is going out. The column beside it has a deadline four months away and it names brokers, not only funders.
The market underneath all this
For context on why regulators keep looking: the MCA market is estimated at roughly $21 billion in 2026, up from about $19.7 billion in 2025, and projected to keep growing through the decade. Independent sales organisations and brokers originate an estimated 70 to 80 percent of that volume.
That second figure is the one worth sitting with. The distribution channel is the industry, which is why registration requirements have started naming brokers rather than stopping at funders. If you are reading this you are most likely in the segment the next round of rules is aimed at.
What to do with this
- Nothing new on 1071 if you place advances only. Note the exclusion and move on.
- If you place covered products too, ask those funders how they are preparing for the 2028 compliance date.
- Spend the attention on state registration instead. That is where the dated obligations are.
- Do not read the exclusion as a signal that scrutiny is easing. The reasoning behind it is the same reasoning state regulators are using in the other direction.
Questions brokers ask
Are merchant cash advances covered by CFPB Section 1071?
No. The CFPB’s revised final rule, issued in May 2026, excludes merchant cash advances from the definition of a covered credit transaction, along with agricultural lending and small-dollar loans. The Bureau’s stated reasoning was that MCAs are structured differently from traditional lending products and that initial data collection should focus on core lending.
When does the CFPB 1071 rule take effect?
The revised rule is effective 30 June 2026. Compliance — meaning actual data collection — begins 1 January 2028 for institutions meeting the threshold, with the first Small Business Lending Application Register due 1 June 2029. A grace period runs through calendar 2028 for good-faith data errors.
What is the 1071 coverage threshold?
Institutions originating at least 1,000 covered transactions in both 2026 and 2027 must begin collecting data on 1 January 2028 and file their first register by 1 June 2029.
Does the MCA exclusion mean less regulation for the industry?
No. The Bureau excluded MCAs because they are structurally different from loans, not because it concluded they warrant less oversight — and that same structural argument is what state regulators are pressing from the opposite direction. Ten states require commercial financing disclosure, seven attach broker or provider registration, and Texas has a registration deadline of 31 December 2026.
How big is the MCA market?
Roughly $21 billion in 2026, up from about $19.7 billion in 2025, with growth projected through the decade. Independent sales organisations and brokers originate an estimated 70 to 80 percent of that volume, which is why registration requirements have increasingly named brokers rather than stopping at funders.
Alex Makowski
Founder, Infinite Bookings
Runs the lead generation operation behind Infinite Bookings — paid traffic, the funding application, and the delivery pipeline that puts records into brokers’ CRMs.
Reachable directly at alex@infinitebookings.com or 732-609-7182.