How to make small-dollar lending make sense Lending Fintech companies are automating the lending process, making it possible for community banks to make a profit in the small-dollar lending market and meet consumer demand for these short-term loans. By Beth Mattson-Teig ommunity banks have traditionally shied away from making costly small-dollar loans, but some are returning thanks to tech solutions that help streamline the lending process. People occasionally need a little extra cash to bridge a gap, pay for an unexpected auto repair or tide them over until a new job starts. Those loans can strengthen banking relationships and keep customers from going elsewhere in an increasingly competitive marketplace. Yet many C community banks don't offer small-dollar loans because they aren't cost-effective. " There is a perception among banks that small-dollar loans are a little bit taboo or not profitable, " says Andy Papadopoulos, CEO of CloudBnq, a provider of digital lending and loan origination software. However, digital lending processes are bringing more efficiencies to small-dollar lending. St. Paul, Minn.-based Sunrise Banks is a Community Development Financial Institution that sees the negative effects of high-cost credit in the payday loan sector firsthand. The $1.1 billion-asset bank wanted to find responsible alternatives that would be cost-effective for the bank, notes CEO David Reiling. Sunrise Banks has partnered with two different Quick stat 81% of payday loan borrowers would prefer to borrow from a bank or credit union Source: 2017 Pew Charitable Trusts survey independentbanker.org Q 27http://www.independentbanker.org