By Corey Rupp
A while back George Hofheimer called the employer-sponsored small-dollar loan a “boring innovation whose time has come.” He argued that boredom was the point. These loans are not a balance sheet play. They are an on-ramp for members the credit union may never otherwise meet.
Since then, the most common question I kept thinking went something like: “That sounds great, but does it actually work in practice?”
Now we have a real answer. Affinity Plus Federal Credit Union launched an employer-based loan for its own employees this June, and the early results will be highlighted in a forthcoming case study from Employer Choice, the vendor we used, although there are also other vendors in the market, as well.
I want to share what happened, because the numbers are good, and the way Affinity Plus got there is even more instructive.
Affinity Plus could have gone straight to select employee groups (SEGs) and other employer partners. Instead, we chose to pilot with our own roughly 600 employees first. The goal was simple: understand every operational step from end to end before asking an outside employer to trust the program.
That is a boring decision, and it was the right one. If something was going to go sideways, it would happen in front of friends.
The credit union branded its no-credit-check loan “APlus Pay” and made it available through the UKG benefits portal where employees already manage their other benefits. No new login to remember and no special trip to a branch.
What the First 3.5 Months Look Like
The program went live on June 2. Six employees took a loan on day one. As of Oct. 15, here is where things stand:
- 50 employee loans approved, from roughly 600 employees, or about 8 percent participation
- $130,000 in funds sent to borrowers, with no credit scores required
- 0% delinquency or default
- One loan repaid early, with no fee or penalty
- Every other payment made automatically through payroll deduction
Affinity Plus also reports that there were some questions and hiccups in the first few days, which is what you would expect from any launch. Once those were resolved, the program has run very smoothly.
The feedback to HR is worth reading closely, because it describes a product members actually want.
- They appreciated having an option in a moment of financial need.
- It was easy to use. Approval was quick and automatic, and funds arrived in one to two days by ACH.
- Payroll deduction made repayment painless.
- They valued privacy. Employees could apply and be approved online without explaining to a loan officer or to anyone in HR why they needed the money.
That last point deserves attention. Most of us design lending around the loan officer conversation. For a lot of people facing a car repair or a medical bill, that conversation is the barrier. Taking it away did not weaken the program. It made it work.
The Heavy Lifting is Behind the Scenes
When I talk with executives about this model, I hear a worry that it must be complicated to set up. The case study shows where the work actually lives, and it is mostly in coordination rather than invention.
Connect to payroll. In our case, Affinity Plus brought in its UKG representative early to agree on timing and data exchanges. Employer Choice built secure file transfers to automate the flow. UKG added a link in the benefits portal and a deduction code so borrowers can see their loan payment on their paycheck.
Keep control of the rules. Affinity Plus set its own eligibility and underwriting parameters. Decisions are automated using what the payroll file can confirm, such as active employment, tenure, pay frequency, gross pay, and limits on the share of a paycheck that can go to loan payments.
Own the member experience. Every screen, disclosure, adverse action notice, loan document, email, and text message was reviewed and approved by the credit union. These are Affinity Plus loans with Affinity Plus branding. Employer Choice simply automates the delivery, signature, and storage.
Make operations easy. Funds go out by ACH through a daily automated file. Payments land in a deposit account the credit union designates. Staff can use a reporting portal updated daily, and key loan data is sent to the lending core by API. Signed documents arrive daily for secure storage in the credit union’s own environment.
None of that is flashy. All of it is the kind of detail that decides whether a program survives contact with real life.
Affinity Plus is now working to identify the right employer partners and SEGs to offer APlus Pay as a benefit. They are also finishing automation that checks whether a borrower is already a member and, if not, onboards them before the loan is approved. For their own employees, they skipped that step and simply required membership to apply.
That second piece is where the strategy gets interesting. Every new borrower who joins is a new relationship, found through an employer rather than through a marketing campaign.
The Lesson of the Boring Innovation
Now the Affinity Plus business development team can approach existing SEGs, prospective SEGs, business lending clients and other employer partners with a solution to help address the needs of their most financially vulnerable employees. Aplus Pay is a gateway to showing that they care about the needs of that employer to keep its employees happy and engaged, to deepen the relationship with that employer and grow membership with its employees.
The innovation is boring. The opportunity is not.
Corey Rupp is chief retail officer with Affinity Plus FCU in Minnesota.
