Woodstock Institute Pushes for Fairness in Small Business Lending

Illinois Consumer Advocacy Group Responds to CFPB Proposal

Andy Spears
2 min readJan 7, 2022


In response to proposed rules on small business lending issued by the Consumer Financial Protection Bureau (CFPB), Chicago-based Woodstock Institute released a comment letter calling for fairness in data collection.

In their letter, Woodstock outlined some key concerns with the current process of data collection relative to Section 1071 of the Dodd-Frank Act.

Specifically, Woodstock highlighted the following needs relative to small business lending:

  • Collect and reporting credit score data: The CFPB already collects this data in the mortgage context and has found that: “Black and Hispanic White applicants are on average denied at a higher rate than non-Hispanic White applicants, even if they are within the same credit score range.” Failing to collect credit score data will enable small business lenders, as they do now, to hide behind the fact that we don’t know the credit scores.
  • Stop collecting race, ethnicity, and gender data based on the lender’s visual observation: This is unreliable and raises equity concerns. If an applicant selects “do not wish to answer” for a race/ethnicity/gender question, but then the lender makes an assumption and essentially answers for the applicant, that is taking away the agency of the applicant and overriding their reasons for declining to answer.
  • Present the data to enable researchers to identity discriminatory lending patterns by predatory lenders: Our working hypothesis is that predatory small business lenders, who charge triple-digit interest rates, are targeting communities of color. The data should be presented to the public to enable Woodstock and others to test this hypothesis — just as Woodstock recently did in the payday loan context: “High-interest loans in Chicago target Black neighborhoods.”

The Institute’s letter noted:

The usurious rates charged by some non-bank lenders, . . . led us to develop a working hypothesis that in the small business loan market — similar to the consumer loan market — predatory, non-bank lenders target communities of color. Triple-digit interest rate loans to small businesses are analogous to triple-digit interest rate payday and title loans to individuals.

Photo by Daniel Thomas on Unsplash



Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .