Salary Finance has won BITC’s Small Responsible Business of the Year Award 2018, for helping people avoid payday loans and high-cost credit. It uses employers’ payroll systems to lend money to employees, even those with poor credit history, at lower interest rates thanks to its reduced operational costs, compared to traditional lenders.
4 Jul 2018
A quarter of people working in the UK right now are experiencing financial insecurity, and eight million of us have no savings at all. These financial burdens impact us in other ways; 67% of employees who find things financially difficult report at least one sign of poor mental health, compared to 41% of those who are financially comfortable.
Salary Finance, which picks up BITC’s Small Responsible Business of the Year Award 2018, responds to these growing social problems by helping people avoid payday loans and high-cost credit. It uses employers’ payroll systems to lend money to employees, even those with poor credit history, at lower interest rates thanks to its reduced operational costs, compared to traditional lenders.
The business also helps people with budgeting, affordability and savings, limiting loans to 20% of an employee’s salary with capped 3-year terms to reduce the overall cost of debt and time spent paying it off.
So, what progress and impact has it made so far? Having started only in 2016, Salary Finance now works with ~100 large employers, including local authorities, and its platform is now available to over half a million individuals. They have over 12,000 customers and over 50% using the service for debt consolidation. This resulted in borrowers saving almost £6 million in interest payments, with each employee customer saving an average of £600 in interest, helping them to get out of debt 6 to 12 months sooner.
The company is able to remain competitive thanks to the efficiencies of its digital administration system and platform. It was able to work with the UK’s second largest employer in less than two months, integrating with its existing platforms – employees can use the company’s online system to apply for borrowing or savings products in less than six minutes.
Nick Frankland, Managing Director of Fintech at Legal & General Insurance and Non-Executive Director at Salary Finance said: “We are really proud of the work that SalaryFinance are doing and this award is highly regarded recognition. It’s a team effort back at L&G to support them in their mission and growth. Thanks to everyone who has helped back at L&G. In the first significant year of trading after L&G bought 40% of Salary Finance, the business is on track to grow by ten times and launch in the USA. The pace is breath taking. We hope to have almost 1m people on the platform by the end of the year”
Marianne Hernandez, social worker at Hackney Borough Council "I’d been living in my overdraft for a few years, and it was really starting to get me down. Using Salary Finance has been a massive relief for me. Now I'm out of my overdraft and I've recently started looking into saving."