This fact sheet explores employer-based small-dollar loans as a tool for improving access to credit and financial stability for workers in low-wage jobs. We studied the growth of the Community Loan Center of America (CLC) Small Dollar Loan program, through which participating employers facilitate loans to employees of up to $1,000. We analyzed loan performance and participating employers’ and employees’ experiences in the program.

WHY THIS MATTERS

Many Americans do not have any savings or only have a few hundred dollars. Workers in low-wage jobs in particular can struggle to manage cashflows between paydays. Without access to mainstream credit, many workers in low-wage jobs turn to high-cost payday lenders, which can undermine their long-term financial health. Employers can play a more active role in supporting their employees’ financial well-being through workplace benefits such as employer-sponsored loans.

WHAT WE FOUND

• CLC Small Dollar Loans help employees manage monthly expenses and financial needs that might otherwise jeopardize their financial well-being.
• The loan can function as a revolving line of credit—like a credit card but with fewer fees and at lower interest rates. Many participants borrow more than once and access loans for both unexpected financial emergencies and routine financial pressures.
• The program’s overall charge-off rate—or rate of severely delinquent loans written off as unrecoverable—is 6.2 percent. The automatic nature of repayment through payroll deduction is likely driving this relatively low charge-off rate.
• Participating employers are diverse in type and size and report that setting up and facilitating the loans are relatively light lifts.

HOW WE DID IT

This analysis draws on administrative program data from 2013 through 2024 and qualitative data from interviews with program administrators, franchises, employers, and employees participating in the CLC Small Dollar Loan program.