The concept of a “premium” payday loan is a relatively new one, but it’s one that has gained traction in recent years as companies like the one that provides the new “Premier Payday” loan, BMO Capital Markets, have raised millions of dollars in venture capital.
The new loan, launched by the Canadian bank in early February, is aimed at helping people who are struggling financially get back on their feet quickly after a bad business move.
While there are a number of reasons a payday loan might not be the best choice for everyone, it’s definitely a nice way to get back into the grind without the hassle of paying down debt, says Tim Farr, founder and CEO of BMO.
“It’s something that I think is actually a great thing, and I think it could really help in the current economic climate,” Farr told Bloomberg Television in an interview on March 13.
Payday loans typically are made by payday lenders, who offer loans with higher interest rates, and typically require customers to work for a fixed amount of time.
But they’re also a popular way for people who don’t have much cash to take out a payday.
The Premier Payday loan is different in that it offers a fixed interest rate on loans made at a rate that will help those struggling financially.
It also doesn’t require customers either to work or pay down debt.
The lender is offering a maximum of $100,000 for borrowers in the U.S. and Canada, and an additional $150,000 maximum for the first loan, depending on whether the borrower has a student loan or a student-loan balance.
PayDay lenders are also starting to offer other perks to their customers, such as an extra 20% bonus on purchases.
“They’re also offering some other perks that they think are going to help their business, too,” Farra said.
“We’re looking to see what we can do in Canada to encourage these kinds of people to come in, so we’re really excited to have a chance to get some of them into our portfolio.”
While BMO doesn’t specify how much money it’s seeking to raise, Farr said that they hope to be able to expand their business to include the Premier Paydays in the future.
“What we’re looking for in the next six to 12 months is to do something that allows us to do some growth in our overall business,” Farsaid.