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Boston-based fintech startup Salary Finance has raised $32.8 million and appointed a new leader for its U.S. operations, as it seeks to expand lending services both in the U.S. and the U.K., its initial market.
The Series C funding round announced on April 16 was led by existing backers Blenheim Chalcot and Legal & General, who also spearheaded a previous funding round for the company in August that yielded $20 million.
Dan Macklin, the co-founder of online personal finance company SoFi, will become CEO of Salary Finance Inc., the company’s U.S. division, as it aims to bring its success across the pond stateside.
The four-year-old startup has been featured in a Harvard Kennedy School report that found through its financial wellness program, it boosted employee retention by 28% and reduced employee costs for interest repayment by about two-thirds.
Salary Finance aims to tackle the issue of consumer debt of employees through their employers. Using salary-linked loans, its employee benefit program gives companies a way to reduce the high-interest debt their workers carry and help employees improve their credit scores. Because these loans are repaid through salary deductions or bank withdrawals, Salary Finance can issue low-interest loans with a minimal risk of default.
“In Salary Finance I saw the same opportunity I saw with SoFi -- to make a positive difference in the financial lives of millions of people, while creating a multibillion dollar company,” Macklin said in a statement.
The benefit to the companies who use Salary Finance’s services is having a workforce that is better able to focus on their jobs without the pressures of financial worries . In a survey conducted by Salary Finance earlier this year, the company found that nearly half of American workers have financial distress that can lead to lost productivity, depression, panic attacks and poor sleep amounting to a $500 billion annual cost to American businesses -- or about 2.5% of U.S. gross domestic product.
Ambreen Ali is a freelance writer and editor based in the New York City area who specializes in business and technology. She has 15 years of reporting experience, including covering Capitol Hill and reporting from South Asia.