December 31, 2019Uncategorized
Small business, especially those that have started in 2019, have an unusual business climate ahead of them. This is due to the competition in the business sphere, as well as, the working criteria of the modern workforce. The latter is the more important issue. What with candidates demanding added benefits such as company-maintained credit cards, and student loan repayment assistance, aside from the regular benefits.
A Dilemma for Small Business Owners: Student Loan Repayment and Other Perks
The situation has put owners of small businesses in a bit of a pickle. This is seeing as they have some limitations that prevent them from outright giving the potential employee what they want.
These limitations could be one or more, or even all of the following:
- Severely limited budget, in case the company is a startup or is just beginning to get out of the startup phase. Money is always going to be an issue unless you have a tremendous investment, and can afford to give employees their choice of benefits.
- Lack of credibility, in case the business is operating in a lesser-known niche. You may not get approval from third-party authorities on benefits such as student loan repayment assistance if you are not a well-known business.
- Lack of resources, in case your business fits in the cottage industry sector, in which case you’ll be limited by premises space, company-maintained vehicles.
Any of the aforementioned issues could potentially derail your benefits plan, especially when it comes to student loan repayment.
Student Loan Repayment Tips for Startups and New Businesses
The above doesn’t have to be the case though, as there are some ways you can circumvent everything holding you back from providing your employees assistance with their student loans, among other benefits. Please note that the following tips apply to various other perks as well.
Assist with Either Principal Amount or Interest
There are two parts of every loan, especially student loans. This is the principal loan amount and the interest that accrues over time. Depending on the person who took out the loan, how much they took out, and what their plans are regarding repayment, the interest may vary by a lot (the principal amount will obviously stay the same.
At the time of hiring, you can evaluate where the employee stands, in terms of their financial situation (whether they need to pay a lot of interest, or they have just gotten out of college, with little interest to pay off).
Then, you can go about offering repayment for whichever amount is lower (or higher, depending on where the company can afford to pay). This will give the employee a much-needed boost in confidence regarding their own repayment capabilities.
Collaborate with a Repayment Assistance Service
There are financial and human resource firms that strategically partner with companies in order to help their employees pay off their student loans. They do this by either helping the host organization with the processes related to student loans or by providing financial help in the form of funds.
In either case, you can have at least one aspect of the repayment equation taken care of by a third party. This can help you point your efforts towards retaining the employee and growing the business.
Provide Assistance with Daily Expenses
One very good way to help your employees with their student loans is to take care of their other expenses, while they pay off their student loans.
This can be done in one or more of the following ways:
- Provide a company-paid credit card. A Costco card could be used for groceries and a Macy’s credit card could be used to pay off clothing needs.
- Create a commuting assistance service, either with hired cars that pick and drop employees, or a financial grant that pays for fuel and/or taxi fares.
- Have a monthly budget allocated towards daily expenses. Employees can access upon completing a certain number of months at the job.
Whichever way you choose; you are sure to take a huge burden off the employees’ shoulders.
Creating an Annual Repayment Grant
The most direct way to pay off the student loans of employees, creating an annual grant of a pre-decided amount will help you close the extent of the loan. This will effectively shorten the total time it would take the employee to pay it off fully.
This amount can grow each year, and it would encourage the employee to stay with the company year after year, thereby resulting in an effective employee retention strategy as well.
Your employees will only be as effective as their financial situation allows them to be. This is why it pays dividends to provide student loan help. The less an employee has to worry about paying it off and getting on with their life, the better an asset they will be for you.