MANILA – A local startup is offering salaried workers the option to draw in advance from their paychecks, adding to the wave of internet-based sachet loan options.
Advance.ph simulates the "bale" system and allows partner companies to provide loans from P1,000 to up to 50 percent of an employee's salary, its co-founder Jaime de los Angeles said.
It was designed to help at least 80 percent of Filipinos go from paycheck to paycheck, dreading "petsa de peligro" or the day before payday when funds are dry.
"Many Filipinos go through that situation in a month-to-month basis and we really want to come up with a solution to address that,” De los Angeles said.
"We cater really to the sachet mentality of many Filipinos who are used to getting a little bit of what they need, when they need it versus getting a bigger chunk," he said.
Loans are processed in 2 steps and within seconds while payments are made through salary deduction and can be extended to up to 4 tranches or within 60 days, co-founder Addi Guevara said.
There is no need for collateral, a witness or a co-borrower since the maximum loan amounts are covered by the employee's salary, he said.
Advance charges a processing fee of 3.5 percent but it has no interest or other charges, making it more economical than using a credit card, the founders said.
The lending platform caters to both small companies with as low as 25 employees and to conglomerates. It is also “on track” to break its full year target of P100 million of loans dispersed, De Los Angeles said.
Guevara said partner firms could give them access to between 300,000 to 500,000 employees in the country, but he did not disclose the total number of current affiliates.
Asked about the “shaming” strategy where lenders reach out to mobile phone contacts of the borrowers when they default on payments, Guevara said they would reach out through legal means with “definitely no harassment,” adding salary deduction is the standard and preferred payment method.