According to the expert researches, about 80% of American consumers have some kind of debt. This data includes traditional long-term loans, residential mortgages, vehicle or student loans, revolving loans. This list also includes so-called PDL, payday loans.
What is PDL?
PDL is a form of alternative financial services that allows you to receive cash on an urgent basis to cover emergencies or to pay the borrower's expenses until his next paycheck. Payday loans are positioned as an optimal solution when a borrower needs money as soon as possible. These loans have short repayment periods and their term usually ends on the borrower's payday.
The amount of PDL usually does not exceed $500 and the duration of the loan varies depending on the borrower's pay schedule. Usually, the terms of PDL are one week, two weeks, or one month.
The main problem of PDL organizations
Recent researches of the global PDL market show that a significant number of financial institutions that provide microcredit services have one problem. And this problem is lack of funds. In such rapidly growing industry, not every organization can handle the growing amount of PDL applications. There are several traditional ways for PDL organizations to get funding. The most popular ones are bond loans, bank loans, and the raising of private capital. The disadvantages of these methods are limited funding amount, the time-consuming process of applying and approving, and high interest rates.
PDL market with such high lending rates and possible profit could not go unnoticed. Different organizations, platforms, and companies that offer alternative sources of funding for PDL organizations have recently begun to emerge.
One of the prime examples is the British fin-tech company named Hoffman-Graham. They developed software that receives incoming applications from PDL organizations all over the world, analyzes these applications on a wide range of different indicators, screens out unsafe ones, and approves reliable ones for funding.
Hoffman-Graham allows platform users to finance PDL applications with their own funds. Profit from such transactions is distributed between the company and its partners.
This conceptually new approach also offers more favorable terms for PDL organizations. So lots of PDL organizations are moving away from standard financing methods in favor of mentioned alternative sources because they offer more attractive financing terms.