In a recent development, the Federal District Court for the Eastern District of Kentucky has issued an order granting a motion to preliminarily enjoin the Consumer Financial Protection Bureau (CFPB) from enforcing the Small Business Lending Rule (the “Rule”). This decree was issued on September 14th and was a much-welcomed resolution for the plaintiffs involved in the Kentucky lawsuit.
These plaintiffs, including the Kentucky Bankers Association and several Kentucky banks, were extended the much-needed relief. The contested Rule was professionalized under section 1071 of the Consumer Financial Protection Act.
What makes this injunction noteworthy is its scope. The issued order does not limit the beneficiaries of the injunctive relief to just the named plaintiffs. Rather, it extends this relief to all companies that are directly affected by this Rule, thus lifting a significant compliance burden off the shoulders of small businesses across the United States.
The implications of this order are far-reaching as it impacts the enforcement of a regulation that directly concerns every small business lending transaction in the country, where a company seeks to obtain capital through institutional lending channels.
While the next steps in this ongoing legal contest are yet to be revealed, the present ruling will certainly mark a crucial point in the broader debate surrounding the implementation and enforcement of small business lending regulations.