Lender Life CREDIT TRENDS OPPORTUNITIES EXPERT IDEAS SMALL-DOLLAR LOANS Small loans, big benefits Three community banks explain why making responsible small-dollar loans benefits not only their customers but also the banks themselves. By Katie Kuehner-Hebert M ost community banks that make small-dollar loans to customers may not make a lot of money-but they still can gain a lot in return. Take, for example, the 28 community banks that participated in a small-dollar loan pilot program the FDIC conducted several years ago. These banks are making such loans because they found that the products are not only beneficial to their customers but also to the institutions themselves. The FDIC's pilot program was a case study " designed to illustrate how banks can profitably offer affordable small-dollar loans as an alternative to high-cost credit products such as payday loans and fee-based overdraft programs, " the agency writes. Overall, small-dollar loan default rates were in line with default rates for similar types of unsecured loans, according to the FDIC. " A key lesson learned was that most pilot bankers use small-dollar loan products as a cornerstone for independentbanker.org ICBA Independent Banker 63http://www.independentbanker.org