Unfortunately, the costly resources needed to build a loan software, confusion when using Excel, lack of privacy when using Excel sheets to manage and keep track of loan information, or even tedious and bulky paperwork involved make loans to staff a difficult endeavor. As a result, most companies step away and dump the idea altogether.
First, you must figure out why you want to set up employee loans. Some many justifiable reasons and benefits outrightly trump the hindrances. Let’s take a look at a myriad of benefits setting up staff loans offers:
Boosting employee morale and loyalty
Providing staff loans for your employees shows that you care about them beyond the paycheck. Employees who feel valued and supported by their employer are more likely to be loyal and stay with the company for the long term.
Access to otherwise expensive products
Sometimes employees need money for essential but expensive items like major car repairs or medical bills. Employee loans can help them access these necessities without resorting to high-interest payday loans or credit cards.
Meeting urgent needs
Unexpected emergencies happen. A staff loan program can provide a financial safety net for employees facing sudden expenses, preventing them from falling behind on bills or getting into debt.
Keeping employees focused on tasks
Financial stress, no matter the severity, can be very distracting for employees. With staff loan programs, you can minimize on-the-job distractions, improve their focus, and give their best efforts.
Now, what are some of the kind of loans you can provide your staff? We’ll tell you:
Personal loans
These kinds of loans are available to staff for any personal needs they want to satisfy. It could spread over 1-3 months, usually a maximum of 6 months.
Payday loans
These are also short-term loans that are repaid on the next payday. Employees collect their salaries in advance to take care of emergencies and must then repay in a lump sum on salary day. But they often carry very high interest rates, which can trap employees in a cycle of debt.
Asset finance
These are available for employees who need to buy work-related assets such as laptops or household appliances like fridges, etc. Consider partnering with a vendor who can offer discounts on purchasing these assets with a flexible repayment system.
Car loans
This type of loan is often available to employees of larger companies, and repayment is usually spread over 4 years. Issues like high transportation costs, tardiness, and the stress of moving around affecting productivity can all be eliminated with this loan. The loan company leases the car in their name instead of the employee. When payment is complete, ownership is transferred to the employee.
Mortgage loans
Big players like oil companies, banks, and other large organizations with a strong financial position, can offer their senior staff mortgage loans to buy or finance real estate such as houses. This type of loan has a longer repayment period ranging from 15 to 30 years so employees can spread payment over a manageable period without running into more debt.
How to set up Lendsqr to power your company employee loans
As an HR, these are the steps you should follow to set up Lendsqr to power your company staff loan easily:
For security reasons, you can configure your account so that only those with your company domain name can have access with a special URL. If your company is large-scale and keen on customization, you can have a customized link such as loan.companyname.com.
Step 3 – Create your loan settings
Set up your loan. Each of the loans highlighted above has slightly different setup methods.
1. To set up a payday loan: Set it up with a simple interest rate with a bullet payment structure. This means the entire loan amount plus interest is due on the next payday.
2. To set up personal loans: Set up as multi-tenure loans which means you would receive repayment between 1-6 months.
3. To set up asset finance and car loans: Set up in such a way that when employees take the loan property, disbursement goes directly to the vendor you’ve trusted to provide those things. This strategy is more beneficial so there is no diversion, mismanagement, or opportunity for the money to be misused.
4. To set up a mortgage loan: Set the loan term for up to 10 years and your staff can pay back monthly.
How to promote staff loan access
1. Via intranet: You can embed those products and their links within your intranet so your staff can click on the intranet to apply for a loan.
2. Via email: You can send the staff loan program information to your staff via email, and they can access it from their mailbox.
Keep your employees motivated and stay in business
Happy employees are good for business. Lendsqr partners with your loan business to help keep them motivated, loyal, focused, and well taken care of especially during emergencies. Consequently, your loan business thrives more than you imagined. So, consider setting up employee loans for your staff.
If you’re ready to get started, send us a message at growth@lendsqr.com and we’ll put you through.
If you’re a non-profit or development finance institution (DFI), it should be easier to run a lending program if you're already doing the hard part of reaching people most others won’t.
So what is Lendsqr, and how does it work? What makes Lendsqr the go-to platform for lending? Explore its key features and how they can help you build a thriving loan business.
The end-to-end loan management software that’s rewriting the rules for lenders globally by offering enterprise-grade features without the enterprise-grade costs.
