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Independent Banker. Three community banks explain why making accountable loans that are small-dollar not merely their clients but additionally the banks on their own.

Independent Banker. Three community banks explain why making accountable loans that are small-dollar not merely their clients but additionally the banks on their own.

Three community banking institutions explain why making responsible loans that are small-dollar not just their clients but additionally the banking institutions on their own.

By Katie Kuehner-Hebert

Many community banks which make small-dollar loans to clients may well not make lot of money—but they nevertheless can gain a whole lot in exchange.

The FDIC’s pilot system had been an incident research “designed to illustrate exactly just how banking institutions can profitably provide affordable small-dollar loans as an option to credit that is high-cost such as for example payday advances and fee-based overdraft programs,” the agency writes.

Overall, small-dollar loan standard prices were in accordance with standard prices for comparable kinds of short term loans, in line with the FDIC.

“A key lesson discovered ended up being that a lot of pilot bankers utilize small-dollar loan items as being a foundation for building or keeping long-term banking relationships,” it claims. Listed below are three community banks which have skilled some great benefits of small-dollar loans.