A number of companies have begun offering employees alternatives to payday loans and other expensive financial products as they are concerned about their financially strapped workforce. Some bosses offer low-interest loans to their employees to help them pay for car repairs and health expenses, and more.
Companies Offering Loans to Their Employees
Employers like software maker Kronos Inc. and International Business Machines Corp. help their employees to pay off their student loans or to consolidate and refinance their student-loan debt. IBM, Nvidia Corp., and Kronos have recently begun offering student-loan refinancing or direct student-loan payments to workers.
Erik Dochtermann, chief executive of New York creative media agency MODCo Media, believes employees won’t work effectively if they are stressed and thinking about how to make ends meet. Dochtermann has offered his help to several of his employees to pay off their high-interest debts and set repayment at a 5-percent interest rate.
There are businesses that offer access to low-interest or no-interest credit lines to help employees cover emergency costs or make some debt payments. Others are helping workers purchase big-ticket items and other products.
In addition, employers have started joining with firms like Kashable LLC, Zebit Inc., and Ziero Financial Inc. to fund and service loans. There are companies that offer such help in conjunction with seminars for employees focused on debt, saving and budgeting.
Workers Faced with a High-Interest Problem
While talking about loans and interest rates, it is worth mentioning to highlight the importance of alternative lenders that have become so much popular recently. To enjoy lower rates and the best payment processing services, business owners should turn to reputable companies like First American Merchant. FirstAmericanmerchant.com (FAM), a reliable business lender, offers various business funding options and an exceptional Merchant Cash Advance to businesses of any type and size.
Business owners now admit that workers face high debt loads. According to recent surveys in the field:
- 51% of full-time employed adults carry balances on their credit cards on a regular basis
- 42% of millennial employees have student loans
- About 5% of American adults use payday loans annually
- 6% of employers offer low or no-interest loans for nonemergency situations
- 3% of employers offer student-loan repayment
Payday loans, which are typically in small amounts and are due to a person’s next payday, can carry fees equal to an annual percentage rate of about 400%. This is according to the federal Consumer Financial Protection Bureau.
According to Alex Horowitz, senior research officer with the Pew Charitable Trusts’ small-dollar loans project, almost 12 million Americans use payday loans annually.
When it comes to retirement borrowings, 20% of all eligible 401(k) participants in a survey had loans outstanding against their 401(k) plan accounts at the end of 2014, which is up from 18% in 2008. The survey was held by the Employee Benefit Research Institute.