Low Budget Loans - Background
- National Credit Regulator
- Micro Finance South Africa
- National Debt Mediation Association
What do Low Budget Loans propose?
Low Budget Loans has broadened its product range a few years ago when we were approached by an Employer to manage the outsourcing of their in-house loan facility to employees.
The drive behind this was mainly the immense administration burden on their HR Division, keeping track of each employee’s weekly advances. But, most importantly, the cash flow impact it has on their day to day business.
Low Budget Loans decided to shift our focus slightly by focussing on certain Employment Groups and entering into a Joint Venture with these employers to offer loans to their employees. Entering into a Joint Venture entails the following:
- The loans that will be granted to employees will be funded by Low Budget Loans and will not have any impact on the company’s cash flow.
- There are NO risks involved for the Employer. Should there be any bad debt accounts, Low Budget Loans will be responsible for the losses and collect the outstanding debts according to the applicable legislation;
- The nett income incurred from the granting of loans to the employees will be shared between Low Budget Loans and the Employer. The percentage of the profit share will be agreed upon beforehand during negotiations and is distributed on a monthly basis. These funds may be used as the employer sees fit. Some examples include the following
- Cash / Incentive prize to the employer of the month
- Financing the year end function
- Negotiating a cheaper loan product for the staff
- Any other staff upliftment etc.
- The entire process when an employee applies for a loan is handled telephonically with voice recordings. No need to complete any documentation, no need to visit our branch. Pay-out of loans is within 15 minutes from the time that the call was successfully completed with the client, confirming all his details. The loan will be paid out directly into the bank account where the employee has immediate access to the funds.
- To enable Low Budget Loans to assess the employees in order to grant the loans, we need access to the selected information on the payroll. Only the “view” function is needed to obtain the necessary information to enable us to create an account for the employee, capture his / her details on our system, assess his income to grant him an affordable loan.
- Loan instalments have to be deducted from the monthly / weekly salary of the Employee. Low Budget Loans will be able to provide an electronic file that can be imported directly into your payroll software.
- The deducted funds need to be transferred to Low Budget Loans, allocated the all employees accounts, before a new loan can be considered.
- In the event that an employee does not qualify for a loan (see reasons below*), we will inform the employee accordingly. By doing this, the relationship between Employer and Employee is not negatively affected. The employee is unsatisfied with Low Budget Loans and not his Employer for not granting him / her the loan.
*His / her affordability does not allow a loan as prescribed by the NCA.
*He / she was terminated and will leave the services of the Employer end of that month.
*He / she is not yet employed for a minimum of three months.
Low Budget Loans' Track Record
Low Budget Loans has existing Salary Deduction Agreements (SDA) agreements in place with Employers, (we are more than comfortable to publish these Employers, should you be interested for reference purposes). Current SDA Agreements with Employers vary from between 300 and approximately 4 000 employees on their payroll.
"Emergency Staff Loan" Product to Employees
- A Standard loan product from R100 – R2000 (To kick off and can be reviewed in future).
- We are able to accommodate weekly and monthly earners.
- The standard fees and costs pertaining to a loan are the following:
- Initiation Fee - 15% of the loan amount
- Service Fee - R60 + VAT (Pro Rata)
- Interest Rate - The APR (Annual percentage rate for qualifying clients will be 28%)
Low Budget Loans is responsible for the marketing by printing stickers that we paste on the blank payslips (prior to the Employer printing the info on the payslips) with the relevant information. (Find attached hereto an example). This needs to be a point of discussion whereby all parties decide if this is the suitable method for your specific type of employee / field of business.
Low Budget Loans is proud to announce that we comply 100% with the National Credit Act and at the same time, we already comply with all the new Amendments and Regulations as published in the Government Gazette that is only to be implemented by 1 July 2015.
This is only a short version of what we can offer but should give an understandable scope of our business and our versatility in customising a service and product to the needs of your Employees to the benefit of you the Employer. Keep in mind by “outsourcing’ the offering of this service to your employees, you relieve your HR Division of a huge administration burden and simultaneously improve your day to day cash flow.
And don’t forget – Use the Joint Venture benefit and finance those “out of budget” staff requests.
We anticipate your positive feedback in this regard and we will be looking forward conducting business with a company of your stature.