Zebit commits to developing a no-cost, 0% APR option for emergency cash needs of employed individuals. By using its proprietary payment platform, Zebit can partner with employers to provide a cash advance against future earnings that can be paid back over time. Zebit currently provides a no-cost financial wellness benefit through employers that includes assessment, training, budgeting, and financing for purchases (products or services). This commitment would expand on that benefit to provide cash loans for urgent needs to the employees of employers that Zebit partners with. The challenge is to recruit leading employers to commit to the benefit. Zebit will provide the entire infrastructure and the employer would offer this no-cost benefit to their workers.
This new Zebit product will be structured as a payroll advance to be paid back over a set timeframe of up to six months. All employees of organizations who participate in this program will be eligible for this benefit, which will have no credit report or special underwriting. The loan will have 0% APR, with no-fee and no-penalty credit. Employees will be able to borrow up to 5% of their annual salary (e.g., $2,000 for a $40,000/year salary). Employees will be able to take out multiple loans, however the balance of the loan may not exceed 5% of annual salary. The maximum loan amount will be determined by the employer, typically $1,000 to $5,000. Employers will have the ability to define qualified purposes for the loan (e.g., healthcare deductible, auto repair, etc.). The funds will be deposited directly into a bank account or on a GPR payroll card. The funds will then be paid back from the same account in equal amounts on each payday (over 6 months). This loan will not be paid back using payroll deductions, automatic clearing houses or checks. Instead, this loan will be paid back using a card product, such as a general reloadable card, a payroll card, or a debit card. This loan will not revolve; funds must be fully re-paid before that amount is available to borrow. Employer liability will be determined by the product structure (e.g., if employment ends, employer may deduct any remaining balance from final paycheck). This product will be available through a confidential mobile experience.
This new loan product will be available through the Zebit platform at 325 organizations, and it is projected that 16, 250 employees will make use of this small dollar loan by June 2018. Americans who are facing an unplanned expense, oftentimes are forced to make use of small dollar loans with extremely high fee rates, ranging from 36% per year to 300%+ per year. It is therefore conservatively estimated that each employee will save at least $100 in financing costs by using this no-cost, O% APR loan product instead.
June 2016: Outline the benefit and recruit employer partners. Create a basic product specification approved by employer-sponsors. Recruit staff member(s) to manage project.
September 2016: Approve the user requirements document and begin development. Provide a complete product specification with workflow diagrams, UX screens, legal agreements, etc. Recruit additional technical staff.
January 2017: Launch a prototype implementation with employer partners. Provide first loans to employees, target 100-500 loans in Q1 growing to 1,000-2,000 loans by Q4.
June 2017: Present initial results at CGI America 2017 and benefits assessment. Grow employer and sponsor and loan availability base, target 1,000-2,000 loans in Q1 growing to 5,000-10,000 loans by Q4.
June 2018: Present documented results and benefits assessment at CGI America 2018 based on over 16,500 loans deployed through this program.
Millions of workers world-wide need access to cash to meet immediate, pressing needs. In America, access to affordable short term credit for urgent priorities such as medical deductible payments, rent deposits, or emergency car repairs is a particularly pressing issue. If an individual does not have good credit, as so many Americans do not, the only available options may be high-cost, short-term loans or very expensive installment financing. Without good options for affordable credit, even individuals with steady employment can find themselves in a cycle of debtcreating stress that affects their health and job performance. In America, the financially underserved pay $70 billion per year in finance charges--$40 billion for single-payment credit (e.g., payday loans) and $30 billion for short-term (up to 2-year) credit. The rates for these loans vary from state to state, but can be as high as 400% per year.
Zebit seeks employer sponsorship and promotion. Zebit will work with sponsoring employers to define the specific elements of the program for their employees. The sponsor will be responsible for internal promotion of the benefit.
Zebit offers a no-cost benefit to partner employers and will absorb all implementation and ongoing costs. The benefit consists of Zebits core platformfinancial wellness assessment, education, and planningalong with no-cost, 0% financing for purchases. The platform will also enable cash loans structured as a payroll advance for approved purposes (as defined by the employer-sponsor). Total credit amounts are limited to a maximum of 5% of an employees gross annual salary and structured as a closed-end, not revolving, financing. The system maintains the privacy of individual employees, but employers have access to aggregate data to assess the benefits of the program both inside the organization and as compared to similar groups. Zebit can also provide media support and evaluation metrics.