Small-Dollar Lending Rule 2025

March 30, 2025 isn’t just a date you circle on the calendar—it’s a turning point for small-dollar lenders. That’s when the CFPB’s long-awaited Small-Dollar Lending Rule officially kicks in. And if you’re still treating it like background noise, it’s time to tune in.

Because this rule changes how lenders process payments, communicate with borrowers, and prove compliance—and the stakes are high.

We’re here to unpack exactly what’s changing, what it means for your business, and how LendSuite’s all-in-one lending ecosystem helps you stay compliant without slowing down.

What’s Actually Changing?

The focus of this rule is protecting consumers from excessive payment attempts and surprise account hits. That means new restrictions and new responsibilities.

Let’s start with the three biggest ones:

1. The Two-Strike Rule

After two consecutive failed payment attempts, you must stop all future attempts—unless the borrower gives explicit permission to try again. This rule applies across all payment channels tied to the same account (ACH, debit card, etc.).

2. Mandatory 3-Day Advance Notices

Before any scheduled payment is withdrawn, you must notify the borrower at least three business days in advance. You’ll also need to send additional notices for:

• Unusual payments (wrong amount, date, or method)

• Any failed payment attempts

• Rights notifications after two failed attempts

These notices need to be in a retainable, long-form format (email, letter or in-person)—texts or app alerts alone won’t cut it.

3. Detailed Recordkeeping

Regulators are expecting a digital trail. That includes dates, amounts, payment channels, borrower communications—everything. If you’re not already audit-ready, now’s the time.

Which Loans Are Covered?

It’s not about loan type anymore—it’s about structure. Here’s what the rule covers:

• Short-term loans: 45 days or less

• Balloon-payment loans: Where one payment is more than twice the size of another

• High-APR loans: APR over 36% and the lender has account access

If your portfolio includes any of these, you’re in the scope of this rule.

Why This Matters for Your Lending Business

Let’s be blunt—non-compliance is expensive. We're talking:

• Penalties and enforcement actions

• Payment disruptions

• Borrower complaints

• Reputational risk

• Lost revenue

But compliance isn’t just about avoiding trouble. It’s about running a cleaner, more trustworthy business—and building borrower relationships that last.

How LendSuite Makes Compliance Simple

At LendSuite, we believe compliance should be baked into your operations—not bolted on as a headache.

Our ecosystem was built to help lenders like you:

✅ Automatically track failed payments and enforce the two-strike rule✅ Generate and send CFPB-compliant borrower notices✅ Log every payment, notice, and interaction in real time✅ Audit your entire loan lifecycle with ease

With Infinity Software powering your loan management, EPIC Loan Systems handling omni-channel lending and Tekambi optimizing your lead decisioning—all under the LendSuite umbrella—you get a seamless platform that’s compliance-ready out of the box.

We’ve engineered the tools so you can focus on lending, not legalese.

Strategies You Can Start Using Today

Want to go further? Here are a few smart moves to help you adapt:

1. Upgrade your loan management software: Switching to Infinity Software or EPIC Loan Systems simplifies and streamlines compliance.

2. Train your team: Make sure every team member—from origination to collections—understands the rule and their role in compliance.

3. Review your notifications: Update your templates and delivery systems to meet 3-day notice requirements and ensure clarity.

4. Sync payment channels: ACH, debit card, checks—your system must link all failed attempts across every method.

5. Centralize borrower data: Use software that gives you a single source of truth for notices, authorizations, and payment history.

6. Test your workflows: Simulate failure scenarios and check that your system stops further attempts, sends alerts, and logs everything.

7. Plan for new authorizations: Make it easy for borrowers to reauthorize payments after two failed attempts, and keep a paper trail.

How LendSuite Helps You Stay Ahead

At LendSuite, we get it. Regulation is complex—but staying compliant shouldn’t be.

Our platform is built to keep you one step ahead. With automated payment rules, built-in borrower notices, real-time tracking, and audit-ready reporting, we take the guesswork out of compliance.

And with Infinity Software integrated into your LendSuite stack, every payment attempt is tracked, every alert is timely, and every record is in its place—so you can stay focused on growing your business, not managing paperwork.

See it in real-time! Request a free demo today.