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I'm in a micro bank in a town without payday lenders or finance companies and have always considered it the bank's responsibility to fund those small loans.  Sometimes as low as $50.00.  I just charge the maximum allowed and it may only be $2.00 as the APY can only be 21%.  

If anyone has a policy that covers these type loans I'd like to see and the justification for Examiners.  Do you have ATR requirements?  I deduct 28% of income for Housing (even though  roommate pays 100%) and 14% for monthly payment expense. Total is 42% and rest is for living expense. So basically if their existing and new payment are more than 14% of income I would need to bend policy if loan is made. 

My bend is justified by my thoughts that about anyone will repay a $2,000 unsecured loan. 

Any of your thoughts or policy considerations will be appreciated.

Read our latest article to discover 5 essential elements your community financial institution should make sure to contain in your security policies.