Employee Loans: What Is It And How To Get One

Contemporarily, emergencies and the ever-boundless streams of responsibilities seem to have become a non-negotiable financial hurdle employees have to live and grow with, and although salient responsibilities like feeding, accommodation, transportation and others mightn’t take one by surprise, no one ever sees an emergency of any sort coming.

No human plans to fall sick, get robbed or be involved in an accident; therefore, it’s almost impossible to plan for emergency expenses. We’ve all been there — a sudden expense pops up and you’re left scrambling to find the funds to cover it. Whether it’s a car repair, medical bill, or unexpected financial responsibilities, it can be a stressful and overwhelming experience. However, it doesn’t always have to be so, thanks to the advent of employee loans.

Here on, this article will explore what employee loans means, how it works, how it’s a financial game changer for employees, and what you need to do to get one. So, if you’re ready to take control of your finances — keep reading.

What Are Employee Loans?

As the name implies, employment loans or employee loans are a type of personal loan that employees benefit from. These are financial arrangements in which an employer lends money to an employee who needs immediate funds that can’t wait till the next payday.

It’s like having a financial guardian angel in the form of your employer, with usually very low-interest payments incurred. The loan terms are typically agreed upon by both parties and will include a repayment schedule that’ll most likely be repaid through automatic deductions from the employee’s paycheck over a designated period.

Also, low-interest rates and easy payment options as compared to other forms of loan are the perks that make employee loans a go-to.

It’s pertinent to note that this form of loan doesn’t have to be disbursed by your employer. Third-party financial institutions like Earnipay can also ease the burden by offering on-demand pay.

Requirements For Employee Loans

Since this form of loan is one given by employers or third-party institutions, the requirements may vary depending on the employer and the specific loan program. However, these remain nearly constant amongst the list of eligibility criteria.

  • Employment Status: Before anything else, you have to be a permanent or contract employee of an organization or company in order to be eligible for employee loans. However, in some cases, the borrower must have been working for the company for a certain period before they can be considered for the loan.
  • Level of Income: When determining eligibility for an employee loan, the employee’s income is also a key consideration. In certain instances, to be eligible for the loan, a minimum annual income must be met.
  • Credit Check: A thorough check into an employee’s credit history is also a prerequisite for employee loans. This is so because the employee’s credit score and credit history will be evaluated to determine the ability to repay the loan.

How Does Employee Loans Work In Nigeria?

Since this is just beginning to gain acceptance in Nigerian businesses, an employee will most likely have to initiate proceedings. The loan application process may vary depending on the employer or service provider, but an employee has to talk out the need to the employer first.

Afterwards, proper vetting on the employer’s path ensues, before the loan rate, terms, interest fee and repayment schedule are then discussed and agreed upon.

How Does Earnipay Employee Loan Work?

To be on the safest and swiftest side of obtaining employee loans, Earnipay should be your go-to, and here’s an outline of how it works.

  • Application Process: To begin the process of applying for an Earnipay employee loan, you must first be an enabled employee on Earnipay. Your employer is responsible for onboarding you onto the platform, either through the Earnipay’s website or mobile app. Subsequently, your company or employer must sign an SLA/MOU with Earnipay Limited. Once this is completed, employees can complete the individual loan application form and submit it through their HR department.
  • Finance Processing: After the application is submitted, Earnipay reviews the application and carries out documentation and financing exercises which include: confirmation of employment letter, valid ID card(any National ID plus Staff ID Card), a passport photo, executed direct debit mandate, completed and signed loan application form.
  • Credit Check: As required, Earnipay will then carry out a credit search of employees through BVN provided, and also a thorough check on financial capacity for the loan and repayment.
  • Disbursement Of Funds: Upon satisfaction of all the requirements under documentation and acceptance of the loan offer, the application gets approved and authorized to signal the disbursement of funds.
  • Repayment: For the final step, the company/ employer is expected to make deductions monthly from the employee’s salary and remit payment to Earnipay on or before the second day of the following month. It’s imperative to note that for an employee to benefit from Earnipay’s employee loan, signing up for Earnipay’s on-demand pay is a prerequisite.

Final Note

In conclusion, employee loans can be a financial safety net for employees who need to access money for various reasons. By leveraging this, employees can benefit from more favourable interest rates and repayment terms, which can make borrowing more affordable and accessible.

It’s crucial to note that getting an employee loan is a significant financial decision that should be carefully considered, and executed. With proper planning and schemes, employee loans can be a valuable resource to help employees meet their financial needs. Also, by leveraging reputable financial institutions like Earnipay, employees can access affordable and convenient loan options and improve their financial wellness.

Do head onto earnipay.com to get started and unlock a whole new world of financial wellness.

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