Social purpose Fintech firm Salad Money will aim to serve the demand for affordable credit from NHS and public sector employees after receiving a senior debt facility of as much as £40 million via a US-headquartered credit fund.
The facility means more essential workers among the United Kingdom’s millions under-served by traditional credit providers may now avoid high-cost and predatory payday loans or even those loan sharks.
Around 1 in 3 adults are currently experiencing challenges when accessing credit from conventional lenders. One of the main drivers for financial exclusion is being ‘credit invisible’ or having a relatively poor credit score.
Research shows that about 9 million consumers in the UK risk being “excluded from accessing affordable financial services because of flaws in credit scoring.”*
Salad Money is a community development finance institution (CDFI) that provides small-sum loans to key workers focused on the public sector and NHS. And it leverages Open Banking as well as machine learning to determine affordability, so applicants aren’t penalized or excluded for having a sub-standard credit score.
Around 4 in 10 of its borrowers have a CCJ, however, they reliably repay their loans. Half, or around 50%, earn anywhere between £12-24,000 yearly, and about half have kids in their households.
Many consumers would normally get turned down by major lenders who tend to use credit scores, leaving these people with fairly limited options when they really need credit, which 9 out of 10 in the UK do (at least occasionally).
Each of Salad’s loans saves an average customer over £335 in interest when compared with other options available to them.
Salad gives customized financial education, support, and signposting to applicants whether or not it is able to provide them credit. Since establishing operations back in 2019, it has built a reputation with partner NHS Trusts and among public sector / NHS workers.
Salad Money will use the finance facility, which complements other arrangements with existing funders, in order to meet the demand for affordable credit.
Phillip Hyett, CFO of Salad Money, said:
“This new, committed facility brings our total senior debt funding to £50m and with it, the financial firepower to help more NHS and public sector workers avoid high-cost credit. We see first-hand that demand for fair and affordable finance is increasing rapidly and we are delighted to lead the way in helping address this need.”
Salad is reportedly a member of Responsible Finance, which represents the UK’s community finance industry.
The Financial Conduct Authority, MPs from the United Kingdom’s main political parties, the Centre for Social Justice and the Joseph Rowntree Foundation have called for an expansion in community lenders like Salad.
Theodora Hadjimichael, CEO of Responsible Finance, said:
“This landmark deal for the UK’s community development finance sector is tremendous news for NHS and public sector workers who need and can afford to repay credit but don’t have enough fair options available. Without CDFIs like Salad they are locked out of access to finance and risk turning to providers who don’t prioritise their wellbeing. I’m thrilled that Salad will be able to help more people save interest compared with higher-cost options; I’m also delighted that it will be able to boost its educational and signposting work which I know boosts its applicants’ financial resilience.”