PerkFinance helps companies provide affordable loans to their employees without affecting their working capital

Working capital

Financial well-being of employees affects motivation and retention. Facilitating affordable personal loans is one of the steps employers can take to contribute to the financial well-being of their employees. But providing loans using working capital adds a burden to the company finances.

PerkFinance helps companies with existing loan programmes, to offload the capital they are using towards employee loans. This can help them save the working capital that is locked in the employee loan programmes. Assuming that 2 months of salary is outstanding for every employee, the amount locked is No. of employees multiplied with 2 months of average salary per employee.

Without an offering like PerkFinance, companies that want to offer loans to their employees will have to dole out loans from their books, which is a burden in the current market scenario of low operating margins. Partnering with PerkFinance also reduces the administerial overhead of approving, reconciling, and auditing these loans.

If companies do not give out loans to employees, employees are likely to leave and join other companies that facilitate easy loans. With poor credit scoring mechanisms, employees, especially blue collar workers do not have easy access to finance, so they end up borrowing from offline moneylenders and pawnbrokers or gold loan providers. This results in employees getting sucked into a long cycle of debt traps with high interests and hidden charges. Traditionally, lending is discouraged for the same reason – the perception is that lenders win and borrowers lose. Lenders can dictate terms with long processes and paperwork. However, in today’s scenario of high rents, increased expenses and aspirational living, having easy access to loans is desirable for the financial and mental health of employees and it also helps employees tide over unexpected expenses in times of financial duress.

“Partnering with PerkFinance has helped us channel the capital we were using for employee loans, to operations and growth, while continuing to offer our employees affordable and accessible loans. It has also saved us time and manpower that was needed to give out loans on our own,” shared Sheetal from the management team of a textile company based in Chennai.

PerkFinance has partnered with more than 30 employers with a combined workforce of more than 150,000 employees. If you would like to partner with PerkFinance to offer affordable loans to your employees, please write to us at hello@perkfinance.com

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