This month, the CFPB proposed scaling back its small business lending data rule and moving to restrict disparate impact liability under ECOA. In addition, a federal court has blocked the CFPB’s open banking rule, suspending upcoming deadlines as the agency reconsiders its approach. We unpack these federal actions and what they mean for your business, along with the latest state and industry updates.
Federal Regulatory Updates
CFPB proposes a leaner Section 1071 regime
On November 13, the CFPB issued a proposed rule detailing significant revisions to the 2023 small‑business lending data‑collection rule. As proposed, coverage would tighten materially: (1) merchant cash advances, agricultural loans, and loans under $1,000 would be excluded; (2) Farm Credit System institutions would be outside scope; (3) only institutions originating 1,000 or more covered credit transactions in each of the prior two calendar years would be subject to reporting; and (4) the definition of “small business” would drop to $1 million or less in gross annual revenue. The proposal would also remove several discretionary data fields (application method and recipient, pricing, denial reasons, and number of workers) and collapse the compliance schedule to a single effective date of January 1, 2028, with first reporting due June 1, 2029.
The CFPB framed the reset as an effort to improve data quality and minimize disruption, particularly for smaller providers. Comments are due December 15, 2025.
CFPB seeks to circumscribe disparate‑impact under ECOA
The CFPB also issued a proposed rule addressing Regulation B that would clarify ECOA does not authorize disparate‑impact claims, narrow the discouragement prohibition to explicit statements, and adjust standards for special‑purpose credit programs. Although framed as aligning the statute with intentional discrimination, the move would reduce fair‑lending risk exposure for non‑bank lenders even as other federal and state laws continue to police discriminatory outcomes. Comments to this proposed rule are also due on December 15, 2025.
Open banking compliance dates paused
Compliance deadlines under the CFPB’s 2024 open‑banking rule (Section 1033) have been halted by a federal court injunction issued by Judge Danny C. Reeves of the U.S. District Court for the Eastern District of Kentucky. The court noted that the CFPB is already in the process of rewriting 1033 and is unlikely to finalize a replacement before the original deadlines. The judge found that requiring banks to comply with the existing rule would impose significant and potentially unnecessary costs, especially since the current rule may never take effect in its original form.
State Regulatory Updates
Colorado’s decision to opt out of federal interest rate exportation upheld
On November 10, 2025, the Tenth Circuit Court of Appeals upheld Colorado’s decision to opt out of the federal interest rate exportation provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA). This law has allowed state-chartered, FDIC-insured banks to charge borrowers in other states the interest rates permitted in the bank’s home state, ensuring competitive parity with national banks and supporting a uniform national lending market. Colorado’s new law, however, asserts that its interest rate and fee caps apply whenever a consumer loan is made to a Colorado resident, regardless of where the state-chartered bank is located. The Tenth Circuit agreed with Colorado’s reading, holding that a loan is “made” in Colorado if either the lender or the borrower is located there. The court’s majority found that Congress intended to give states the power to reimpose their own usury limits for loans connected to their jurisdiction, even if this disrupts national uniformity.
While the Colorado opt-out concerns consumer lending, it could encourage other states to pursue similar legislation, raising the prospect of a fragmented regulatory environment that may eventually influence commercial lending models, increase compliance complexity, and undermine the predictability that both consumer and commercial lenders have relied on for interstate transactions.
Texas begins rulemaking for commercial sales-based financing (HB 700)
The Texas Office of Consumer Credit Commissioner (OCCC) has announced the start of rulemaking to implement HB 700, Texas’s new law regulating commercial sales-based financing transactions, including merchant cash advances. HB 700, effective September 1, 2025, requires MCA providers and brokers to register with the OCCC, make standardized disclosures on deals under $1 million, and comply with new prohibitions on practices such as confessions of judgment and unauthorized account debiting. The law specifically exempts banks, credit unions, certain tech providers, and some other transactions, but covers a broad swath of nonbank commercial finance.
The OCCC’s advance notice outlines plans for rules addressing registration (likely through the NMLS), annual fees, and a wide range of compliance and conduct standards, including prohibitions on unfair or misleading practices, improper advertising, and evasion of regulatory requirements. Providers will also face new recordkeeping, reporting, and enforcement provisions, and must be prepared for OCCC investigations and potential penalties. A draft rule is expected to circulate to stakeholders in late 2025 or early 2026, with formal proposal targeted for February 2026 and final adoption by August 2026.
Other Industry Highlights
Alternative lending market set to double as embedded finance, regulation, and private credit drive growth
BusinessWire reports that the U.S. alternative lending market is projected to nearly double to over $100 billion by 2029, driven by the rapid adoption of embedded finance, platform-based SME lending, and growing private-credit investment. The sector’s expansion is underpinned by fintech integration with retail and payment platforms, regulatory normalization around AI and open banking, and increased participation from institutional investors. As banks tighten credit and regulators heighten compliance requirements, alternative lenders are leveraging real-time data, digital origination, and strategic partnerships to broaden credit access for both consumers and small businesses. The report underscores that future growth will hinge on lenders’ ability to deliver transparent, data-driven credit solutions and adapt to evolving federal and state oversight. The alternative lending market will nearly double by 2029, reaching over $100 billion as embedded finance, platform-based SME lending, and private-credit funding models gain traction. The sector’s rapid growth is fueled by the integration of lending into e-commerce and payments platforms, increased institutional investment, and evolving regulatory frameworks that emphasize AI transparency and open banking standards. The report highlights that ongoing regulatory developments and compliance demands will shape which models and partnerships thrive, making data-driven risk management and operational resilience key differentiators for the next phase of market expansion.
Embedded platforms filling the small business lending gap
PYMNTS reports that major e-commerce and payments platforms like PayPal, Shopify, and Block (Square) are rapidly expanding their working capital lending programs as traditional banks pull back from small business lending. These platforms leverage real-time sales data and daily settlement models to underwrite and collect on loans, offering SMBs fast, flexible access to capital embedded directly within the commerce experience. Recent earnings show significant growth: Shopify’s outstanding merchant loans and advances rose 42% year-over-year, PayPal purchased $1.6 billion in merchant receivables in nine months, and Block’s Square Loans portfolio grew by over 50%.
Europe’s post-maturity financing model expands in supply chain finance
Global Trade Review explores the rise of post-maturity financing, a new supply chain finance structure gaining traction in Europe and beyond. Unlike traditional reverse factoring, post-maturity financing allows suppliers to be paid in full on the invoice due date by a payment service provider (PSP), which then extends payment terms for the buyer (often without classifying the obligation as debt on the buyer’s balance sheet). This approach offers corporates rapid working capital relief and favorable accounting treatment, while banks and funds remain key behind-the-scenes funders. However, both providers and ratings agencies caution that overreliance or lack of transparency could prompt auditors to reclassify these payables as debt, potentially affecting credit ratings. The product is increasingly used alongside traditional supply chain finance and digital bills of exchange, illustrating a broader move toward hybrid, API-driven funding models that offer both speed and balance sheet flexibility for corporates and commercial finance providers.
Fintech funding surges for embedded finance and alternative credit platforms
FinTech Futures’ November roundup highlights robust investor interest in fintechs building infrastructure for embedded finance, alternative credit, and business payments. Major deals included Ramp’s $300 million raise at a $32 billion valuation, Flatpay’s $170 million round to expand SME payments across Europe, and Zilch’s $175 million funding ahead of a potential IPO. Ripple and Kraken also secured major capital to scale digital asset infrastructure and crypto services. The article underscores that, despite a tighter macro environment, private capital is flowing into platforms that enable new credit models, automate underwriting, and power next-generation working capital solutions for businesses, signaling continued momentum for digital-first
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If you have questions about how these developments impact your business, or need help evaluating your compliance strategy, please contact the Husch Blackwell Alternative Commercial Finance team.
This newsletter is for informational purposes only and does not constitute legal advice. For guidance tailored to your specific situation, please consult your Husch Blackwell attorney.