To qualify for WorkLife’s Small Dollar Loan, your employee must be at least 18 years old, employed for at least one year, and be able to provide their bank account information, driver’s license/passport numbers, social security number, and three references. (If the borrower does not have a bank account, we will help them set one up.) We do not have a credit score requirement, complete a credit check, or require proof of collateral.
While your employees can apply for a personal loan through a credit union, not everyone may qualify. Typically, credit unions perform a credit check, require proof of collateral, and/or require a cosigner on the loan application. Borrowers with low credit scores or no collateral to back the loan are less likely to qualify.
Also, credit unions typically don’t approve loans for under $1,000. When people don’t have access to traditional loan products, they often resort to predatory lending.
When taking out a payday loan, a borrower can pay up to 300 times the original loan amount in interest and fees. If a borrower is unable to repay their payday loan, many predatory lenders will “delay” the repayment of the loan by charging the borrower a fee to rollover the loan—all while the principal of the loan remains the same. A new Colorado law caps the interest rate of payday loans at 36%, but predatory lenders are using a loophole that allows them to partner with out-of-state banks that aren’t subject to interest rate limits.
This loan was designed to be a counter to predatory payday lending by keeping the loan balances small ($400 to $1,000.) Only one loan can be taken out at a time and we do not allow loans to rollover to keep the balance from ballooning. Repayment amounts are kept to 5% or less of the employee’s monthly pay. Our interest rate is 18% and with a biweekly payroll cycle the effective rate (what a borrower actually pays) is 9.6%. We do not pull credit reports and there is no credit score requirement. We also do not use collateral to secure these loans. WorkLife is the lender and we do not sell the loans to collection agencies. Plus, all repayments made to a WorkLife loan are reported to the major credit bureaus, giving employees an opportunity to build credit or improve their existing credit score.
When an employee applies for a loan, we will ask you to verify their employment and current wages—which takes just a few minutes. Once approved, we will send you the employee’s loan repayment schedule so you can set up the voluntary payroll deduction, similar to other employee-paid benefits. We will also work with you to stop payroll deductions for borrowers who have paid off their loan balance.