Social purpose fintech Salad Money will serve rocketing demand for affordable credit from NHS and public sector workers thanks to a new senior debt facility of up to £40m with a US-based credit fund.
The committed facility means more key workers among the UK’s millions under-served by mainstream credit providers will be able to avoid high-cost and payday loans or even loan sharks.
At least 1 in 3 adults now face difficulty accessing credit from mainstream lenders. One of the key drivers for financial exclusion is being ‘credit invisible’ or having a low or poor credit score, and research shows around 9 million people 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) which offers small-sum loans to key workers in the public sector and NHS and uses Open Banking and machine learning to assess affordability, so applicants aren't penalised or unfairly excluded for having an impaired credit score.
About 4 in 10 of its borrowers have a CCJ, but reliably repay their loans. Half earn between £12-24,000 per year and nearly half have children in their households. Many would automatically be turned down by traditional lenders which use credit scores, leaving them with limited options when they need credit, which 9 out of 10 in the UK do from time to time.
Each of Salad's loans saves a typical customer more than £335 in interest compared with alternatives available to them. In addition, Salad gives tailored financial education, support and signposting to many applicants whether or not it can offer them credit. Since launching in 2019 it has built a trusted reputation with partner NHS Trusts and among public sector and NHS workers.
Salad Money will use the new finance facility, which complements arrangements with existing funders, to meet growing 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 a member of Responsible Finance, which represents the UK’s community finance sector. The Financial Conduct Authority, MPs from the UK's three main political parties, the Centre for Social Justice and the Joseph Rowntree Foundation have all called for an urgent expansion in community lenders such as Salad, so people excluded from mainstream credit have better and fairer options available.
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.”