Originally published on LinkedIn by Daniel Macklin, CEO, Salary Finance Inc.

 

Over the past week we’ve watched the United States reckon with a legacy of injustice, racism, and the senseless deaths of Ahmaud Arbery, George Floyd, Breonna Taylor, and others. Personally, I am horrified by the racism revealed in these events, and am working to do my best to listen, understand, and take ownership of what it means to be an authentic ally.

 

I have also been thinking, along with the broader Salary Finance team, about our responsibility as a financial services company to make a positive difference on the world. It’s important to acknowledge the history of racism built into our industry. Although one organization alone cannot fix a broken system, I’m proud that the work we’re doing at Salary Finance can help to make things better. We’re meaningfully helping employees regardless of race, ethnicity, gender, or class to access affordable credit and become more financially secure. As we grow and work with more leading employers across the country, we will be able to provide better financial products to more and more people.

 

If you aren’t familiar, here are some of the facts:

• Due to redlining practices throughout the 20th century, it was harder (if not impossible) for African American families across the US to secure mortgages to buy homes, which is widely seen as the best way to build generational wealth
• Subprime and predatory lenders filled the vacuum created by mainstream lenders not operating in redlined areas, creating an inequitable financial system that has kept under-served consumers from accessing the financial mainstream and securing affordable credit
• These non-traditional or alternative lenders and creditors often don’t report repayments to credit bureaus, which prevents borrowers from building up their credit history
• These lenders are also less regulated, even to this day, meaning they can charge exorbitant interest rates that cause borrowers to revolve expensive credit lines many times over in order to pay back the original debt
• These factors, combined with other issues of racial injustice in our country, has led to a racial wealth gap where the average African American family’s total wealth is $17,600 — compared to the average white American family’s at $171,000

 

One way of helping to close that gap is to make it easier for people to get out of the spiral of high-cost debt. Here’s some of the ways we do that at Salary Finance:

• Because of our relationship with the employer, we primarily look at a person’s employment history, instead of their credit score, to determine their loan offer. This allows us to help those without credit scores or with subprime scores, in an affordable and responsible way.
• Because repayments are made automatically through salary deduction, we can keep our interest rates lower than traditional lenders.
• We are empathetic when someone becomes unable to afford their loan repayments, understanding that “life happens”.

 

Are we able to help everyone who needs help? No, unfortunately not. But we are able to help many people to get a foot on the ladder towards eliminating expensive debt and providing them with a chance for a better financial future.

 

In these difficult times, we’ve been inspired by the leadership of so many in our community and we know that there is an increasing desire on the part of employers to help their employees to improve their financial lives. That gives me hope.

 

But we all need to do more. If you have suggestions for what I can do, or what we can do as a company, please don’t hesitate to share. We’re listening, and we’re getting to work.