New salary advance app could help families avoid getting into debt

An app that offers interest-free salary advances could help one million families avoid getting into debt with payday loans, its founders have said.

Monday, 8th February 2021, 4:45 pm
The borofree app allows employees to spend up to £300 of salary in advance with selected retailers

Financial technology company Borofree is to launch the app which will allow employers to offer staff up to £300 of their next wage to spend at selected leading retailers.

Unlike payday loan companies who charge up to 1500% APR, customers pay no interest and no fees and it is hoped it could help thousands of families avoid using high interest rate loans.

The app, which has been set up with support from investment firm Fortunis Capital, allows staff to spend their salary advance at 60 major brands, including Amazon, Uber, Morrisons, Tesco, Currys PC World, Sky, Just Eat, John Lewis, and The National Trust.

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Minck Hermans, chief executive officer of Borofree said their mission is to give consumers back control of their finances by disrupting an outdated personal finance market that creates a “vicious cycle of debt through punitive interest”.

He said: “Now is the time to solve one of the UK’s biggest problems. Half of households cannot pay an unexpected bill of £300 - while financial worries are the biggest mental health burden of Covid-19.

“Many people are forced to borrow at high interest rates to pay for the essentials in life and we fundamentally believe that is wrong.

“Interest is the enemy and together we must fight to eradicate it, especially for those who cannot afford to pay such high costs but have to use credit to make ends meet.”

Data from the Citizens Advice Bureau shows that over the past 12 months almost 22,000 in the North East, have sought advice on debt.

Borofree has said there is significant interest from employers interested in signing up to offer the app to their staff.

Mr Hermans added: “Every company leader we speak to recognises alleviating financial stress helps improve productivity, reduce absences and increases wellbeing. Above all, it is the right thing to do.”

He said Borofree were ahead of the curve in the sharing economy: “This may have started with the likes of Uber but the next revolution is in financial services, where we use tech to build direct relationships between customers and retailers.

“Existing legacy systems are complex, inefficient and undated. It is wrong that consumers pay the price for that inefficiency through unfair interest rates, whether that is bank card charges or payday loans. We want to break the old model and release millions from the burden of interest-driven debt.”

Justin MacRae, chief operating officer of Fortunis Capital, said that in the UK alone, they have identified 27million people who are just about managing and who regularly have to borrow at high interest rates for basics such as food and heating.

Mr MacRae said: “Borofree is one of the jewels in our crown. It fits with the mission of Fortunis Capital as a leading impact investor – addressing a global problem that affects millions of lives and then finding the solution through innovation and tech.

“In this case, a movement to wipe out that vicious circle of debt that enslaves families.

“That first 1,000,000 is a milestone, but the market here in the UK and abroad is massive and the next target is to help more and more people escape debt.”

Borofree are running demos of their product via borofree.com.