Payday Loans: Think Finance – Employer’s Help Employees Lower Fees

By | Apr 25, 2014

This item appeared back in December 2013. Few operators took notice. Fewer recognized the implications. A software platform that enables borrowers to access a “loan” on their earnings at less than a couple of bucks per $20 borrowed. The “lender” has zero defaults, zero collections, zero ACH charge backs and reversals, no licensing requirements, the borrower does not need a bank account… THIS WILL BE HUGE! And you thought only the “big guys” like Think Finance could participate? Get ready…

Sonic Drive-In restaurants around Phoenix have added a new item to their menu of workplace benefits: short-term, high-fee loans.Arizona Restaurant Systems Inc., a Scottsdale, Ariz., company that operates 28 Sonic locations in the state, allows workers to take out loans ranging from $150 to $500 that typically last two weeks.

The fees, ranging from $8 to $25 plus interest, don’t go to the restaurant franchisee, but to a lender called Think Finance Inc., which makes the loans. Based on the fees, the loans carry an effective annual percentage rate of 100% to 165%.

“Our employees are typically living paycheck to paycheck,” said Spencer Manke, chief financial officer of Arizona Restaurant Systems. He said employees typically repay the loans directly from their paychecks.

Mr. Manke’s company is one of a growing number of employers and payroll firms helping lenders pitch loans to their employees. Since 2010, at least half a dozen nonbank lenders have started marketing loans to companies and payroll vendors. Employer-based loan programs are now available to more than 100,000 workers, according to estimates drawn from several lenders. That number could expand to more than 10 million workers in the next few years based on projections…

Read the Wall Street Journal piece in it’s entirety here: WSJ

And another here: WSJ

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