Employees will be offered loans at a fraction of high street rates under a new workplace borrowing platform launched by a team including Google’s former UK managing director.
The proposition, called SalaryFinance, enables employees to take out loans that are repaid through salary deductions, claiming to undercut the Big Four UK banks by around two thirds on loans under £5,000 for some individuals, with no risk or contribution from employers. The provider says it operates a similar process as that offered to employees of the Bank of England.
Saga, public sector services company Agilisys, and online retailer AO – have all signed up to the platform.
The platform integrates into a business’ payroll system, allowing employees to access loans of up to 20 per cent of their salaries, at an interest rate of 7.9 per cent. Loans are available to all staff that have worked for the business for over a year and who meet an affordability check, as required by the regulator.
Co-founded by Dan Cobley – the former UK MD of Google, banking consultant Asesh Sarkar, and entrepreneur and social finance expert Daniel Shakhani, SalaryFinance is designed to help those in regular work to make huge savings on their interest payments. For every £1 that SalaryFinance makes, they aim to save customers £25.
SalaryFinance aims to stop hard working middle income consumers being hit with unreasonably high interest rates when borrowing through their banks or credit cards and to end the unfairness of those borrowing smaller amounts of money often being charged more than those with larger amounts.
The company says its platform uses similar payroll deduction processes that many firms have built for auto-enrolment and takes an employer less than 30 minutes a month to support.
Asesh Sarkar, CEO and co-founder of SalaryFinance says: “Consumer lending in Britain is broken. For many hard working people, the cost of borrowing is unreasonably high. The banks often fail to offer consumers their low advertised interest rates, particular for smaller loans, while payday loans can quickly get out of control.
“SalaryFinance aims to introduce a better way of borrowing that is fairer, simpler, cheaper and more transparent, particularly for middle-income earners. Unlike the Big Four high street banks, which offer an average interest rate of around 22 per cent APR for loans less than £5,000, we offer every one of our borrowers the same low rate of 7.9 per cent APR.
Dan Cobley, chairman and co-founder of SalaryFinance says: “Our platform is cost-free and incredibly straightforward for businesses to use, integrating easily into all payroll systems, and is similar to a system that is already offered to Bank of England employees.”
Karen Caddick, group HR director at Saga says: “We want to provide a positive work environment where our people feel valued and rewarded. SalaryFinance is an excellent way to do just that. It will help our staff to make the most of their salaries, to live well and to save for the longer term as well.”