Lending fintech Salad Money secures a £40m debt facility
Fintech lender Salad Money, which provides consumers with affordable finance using the power of open banking, has secured a £40m senior debt facility with a US-based credit fund.
Salad Money offers small loans to UK public servants, using open banking and machine learning to assess affordability so that applicants are not penalized or unfairly excluded for having a poor credit score. According to the company’s own data, around a quarter of customers have a county court judgment (CCJ) against them – a type of civil judgment that means they owe money to another person or company – but still reliably repay the money on time. Meanwhile, half of customers earn between £12,000 and £24,000 a year, significantly below the national average.
This means that many borrowers will automatically be rejected by traditional lenders who use credit scores as the basis for credit decisions – but Salat Money is extending them a lifeline at a time when credit is more important than ever. Amid high inflation and rising interest rates, a third of adults now struggle to access credit from mainstream lenders, the London-based firm says, while research suggests nine million people in the UK are at risk of being excluded from affordable financial services on due to credit score.
The £40m debt facility secured by Salad Money will allow it to extend credit to more key workers, allowing them to avoid risky options such as high-cost and payday loans.
Financing is “financial firepower” to help more consumers
Phillip Hyett, chief financial officer at 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 staff avoid high cost credit. We see firsthand that the demand for fair and affordable financing is growing rapidly, and we’re excited to lead the way in helping to meet that need.”
Theodora Hadjimichael, chief executive of advocacy group Responsible Finance, added: “This landmark deal for the UK’s community development finance sector is fantastic news for NHS and public sector workers who need and can afford to repay credit but don’t have enough affordable options available. Without CDFIs like Salad, they are locked out of access to financing and risk turning to providers who do not prioritize their well-being. I’m excited that Lettuce will be able to help more people save interest compared to higher cost options; I am also pleased that it will be able to increase its education and signage work, which I know increases the financial resilience of applicants.”
The announcement comes at a time when many public sector workers in the UK are going on strike over pay and conditions. They include NHS nurses, who, according to the Royal College of Nursing (RCN), have seen an average 10% reduction in real pay over the past decade. The RCN is asking for a pay rise of 5% above inflation to help its members cope with the cost of living.
