tl;dr Predatory lending, even with all of the regulatory attempts to squash the industry, is thriving in all 50 states. Instead of waiting for policy whack-a-mole to solve a century-old problem, employers can take action today. Give your employees a better option, for free, with Employer-Sponsored Loans.
Let’s answer three questions related to the Buoy mission.
- What is predatory lending?
- What is the simplest solution to predatory lending?
- What can I (yes, you!) do?
What is predatory lending?
Predatory lending occurs when a lender (not necessarily a bank — think a payday lending storefront) offers a loan to someone with unethical and unaffordable interest rates with the intent of trapping that individual in a relentless debt cycle.
What is the simplest solution to predatory lending?
Now I know what you’re thinking. The simplest solution is obviously to simply not go to a predatory lender when you need to make ends meet, right? If that was your knee-jerk reaction, consider the reality that millions of Americans face: Every year, potentially every month, they are coming up short on their non-discretionary expenses like rent, gas to get to work, and food to feed their family. In these instances, maybe they can ask friends and family for help. Maybe they can use earned wage access to cover their immediate needs.
Unfortunately, the folks in these situations often encounter a statistically-improbable number of bad luck circumstances. Unexpected medical expenses, mechanical breakdowns at home, the car getting towed — small dollar emergencies which budgeting and early access to future paychecks can’t cover. Small dollar emergencies require a loan on top of paychecks.
And paradoxically, loans for our most vulnerable citizens are also the most expensive, due to the inherent risks found in our systemically discriminated communities.
So, what’s the simplest solution, if a small dollar emergency strikes and we need a loan? The Employer-Sponsored Loan is the simplest solution.
In one sentence, the Employer-Sponsored Loan is a free employee benefit that you can offer your employees to grant them access to ethical and affordable loans.
What can I do today to help?
If you want to learn more about offering this benefit to your employees, here is a list of some of the lenders offering ESLs:
Kashable | TrueConnect | Salary Finance | Community Loan Center
Unsure if your employees need this? Start by answering these two questions:
- Are my employees underbanked?
- Are my employees ALICE classified?
If yes, be the agent of change in your community and take action to solve America’s predatory lending problem today.
Buoy Holdings is an Ithaca-based benefits consultant on a mission to end predatory lending in America. Schedule a meeting to learn more.
