Building a comprehensive, attractive employee benefits package is a significant undertaking for any business, regardless of size. Aside from the programs and coverage designed to ensure the physical and mental health of your staff, initiatives to address your employees’ financial health are also important to consider.
Financial stress can have a significant negative impact on an employee’s mental and physical health, and also on their productivity and engagement at work. By offering benefits that support financial health, employers can help reduce stress, allow better focus at work, and improve overall well-being. Ultimately, an attractive benefit package also helps in retention and recruiting new talent to your team.
While employers often focus on retirement savings and 401K programs for building financial health, these long-term vehicles may not address the short-term needs that employees can face. Brightpoint, a Fort-Wayne based non-profit organization, has developed an alternative for individuals that may have immediate financial needs and packaged this solution as an employee benefit.
About Brightpoint
Since 1965, Brightpoint has played a role in assisting families with basic needs. Serving fourteen counties in Northern Indiana, Brightpoint has 260 employees working to help communities, families, and individuals remove the causes and conditions of poverty. They provide resources, teach skills, and help people with opportunities for a brighter future.
Brightpoint’s mission of eliminating poverty has stayed the same, however, their focus has broadened over the past decade to more aggressively look at all aspects of poverty, including more advocacy work and public policy efforts.
At the forefront of their advocacy efforts is endorsing legislation to counter predatory loans. Indiana does have a loan sharking law in place which limits interest rates to a maximum of 72% APR. However, there is a carve out in this law that makes payday loan businesses exempt from compliance. Nearly every year a bill to expand predatory loan products is considered at the Indiana state house. So far, efforts have been successful in stopping this expansion, but bills that are introduced to cap interest rates at 36% APR for these predatory loans go nowhere. It’s an annual fight, and Brightpoint plans to keep fighting the good fight in this advocacy effort.
An Alternative Solution: The Community Loan Center of Northeast Indiana
Brightpoint’s Community Loan Center of Northeast Indiana offers affordable, small dollar loans to employees whose employers have signed up for this program. There is no direct cost to employers to offer this program as a benefit—loans are funded by the Brightpoint Development Fund. After piloting this program with their own employees, Brightpoint has expanded to area employers, with 31 companies currently participating.
Combatting payday lending
About eight years ago, Brightpoint identified predatory lending as a contributor to poverty in our community. These lenders, such as payday loans and cash advance businesses, often trap consumers in loans that they can’t repay in the agreed upon term and are then forced to extend, resulting in piles of interest at an average of over 300% APR (yes, you read that right, over 300%!). The Community Loan Center was developed to combat this exact issue.
Individuals that are already struggling financially often don’t have access to credit cards or personal bank loans to fall back on when a car breaks down or an unexpected bill hits. They are then left with these payday loan lenders as an option, and many choose them. This is where the Community Loan Center can make a difference.
How the program works
This lending program is available as an employee benefit, and employers simply need to set up a payroll deduction to implement the program. There is no cost to the employer as liability of the loan is absorbed by Brightpoint, and loan repayments are made to Brightpoint through the payroll deduction.
With the program, loans of up to $1,000 (or 10% of annual pay) may be made, at a 21% APR with a 12-month repayment term. For a $1,000 loan, this equates to about a $100 monthly payroll deduction, and $100 of interest over the term. The only criteria for loan approval are: 1) the employee must be at least 18 years of age, and 2) have worked for their current employer for at least three months.
Another benefit of this program is that Brightpoint reports positive payment history to credit bureaus, which is something that payday loan lenders do not do. This can help borrowers build positive credit in the process, as well.
"Nearly half of all workers say they don't have emergency savings,” said Christine Boles, PHP’s Director of Human Resources. “While we can provide education around financial literacy, we also need to meet people where they are. Brightpoint's Community Lending Program allows us to provide a safety net to our team without having to become a bank or collection agency.”
Boles adds that administration of the program is very easy from an employer perspective, and that the benefit has been very appreciated by team members that have used the program.
Adding this program for your company’s benefit plan
Take a step to help address your workforce’s financial health that has returns for both your employees and your business. Contact Brightpoint to learn more about the Community Lending Program and add another feature to your benefits package with no out-of-pocket cost.
Steve Hoffman, Brightpoint President/CEO
Phone: 260-423-3546
Email: stevehoffman@mybrightpoint.org
Online: www.clcofindiana.org/northeast-indiana/
