Salus: Helping Credit Unions Help Members in Need

By John San Filippo

The world of microloans is evolving, and Salus is bridging the gap between credit unions and their members’ short-term financial needs. James Chemplavil, founder and CEO of Salus, met with Finopotamus to discuss how his company is empowering credit unions to offer accessible and sustainable microloan programs.

From Underwriting to Understanding 

James Chemplavil

Chemplavil’s journey into the microloan arena began with a personal encounter. A preschool teacher at his son’s daycare was forced to leave her job due to an unexpected small-dollar emergency. “When I tried to figure out why it was that she couldn’t afford it, it turns out that she didn’t have access to credit because of her credit score,” explained Chemplavil.

This experience ignited a passion to address the challenges faced by the nearly half of U.S. adults who lack prime credit scores. “I started Salus with the goal of helping people like [preschool teacher] Wendy better handle small-dollar emergencies,” he added.

Embracing Cash Flow Underwriting

Salus recognizes that a subprime credit score doesn’t equate to an inability to manage finances. “It’s not that the person doesn’t have income,” Chemplavil noted. “It’s just their credit score doesn’t reflect the credit risk that they are when it comes to a small-dollar loan.”

The Charlotte, N.C.-based Salus focuses on cash flow underwriting, leveraging transaction data to provide a more comprehensive picture of a borrower’s financial situation. This allows lenders to make more informed decisions, expanding access to microloans for those often overlooked by traditional lending models, Chemplavil explained.

Seizing the Credit Union Opportunity

While Salus initially partnered only with other fintechs, the company quickly recognized a missed opportunity within the credit union landscape. Chemplavil described a pivotal realization: “Why aren’t credit unions providing this service to their members when we’re literally getting the data from a credit union in order to help a fintech make this loan?” This led Salus to shift its focus to equipping credit unions with the tools to better serve their own members.

A World Away from Payday Loans

Chemplavil draws a stark contrast between traditional payday loans and the microloan programs facilitated by Salus. Payday loans, with short terms and exorbitant APRs, often trap borrowers in a cycle of debt.

“That’s the reason why in a lot of literature, 80% of payday loan borrowers end up either defaulting or rolling that loan,” Chemplavil pointed out. Credit unions, using the Salus platform, can offer small-dollar loans at significantly lower interest rates, saving borrowers money and fostering financial stability. “It’s a better product for the borrower, and it’s a better product for the credit union,” he emphasized.

Seamless Integration and Automation

The Salus platform provides credit unions with the digital tools necessary to automate the microloan process, from application to disbursement. “What our platform does is it leverages the data that a credit union already has on its members to deliver a digital automated credit decision that helps them give people access to small-dollar loans in as close to real time as possible,” said Chemplavil. This eliminates manual processes, saving valuable staff time and resources. Using connectivity provider Janusea as a middleware layer allows Salus to connect with virtually any core processor.

Meeting Members Where They Are

Salus prioritizes seamless banking interactions. “From a member experience perspective, you want that member to feel like it’s a seamless experience where they can get access to this loan in minutes,” states Chemplavil. The platform offers a white-labeled, fully branded experience, streamlining the application process and ensuring quick access to funds - often within minutes, a crucial factor for those facing urgent financial needs.

Control and Customization for Credit Unions

Credit unions maintain full control over the microloan programs, setting their own rates, terms, and risk tolerances. “It’s 100% up to the credit union’s discretion,” Chemplavil confirmed. Salus provides support by offering best practices and guidance from other successful credit union microloan programs. This enables credit unions to tailor their programs to meet the specific needs of their members and their risk appetite. Chemplavil further explained that the Salus risk assessment platform aims to reduce the risk of defaults from the high numbers associated with scores in the 620-650 range to as low as three percent.

Looking Ahead: A Holistic Approach to Financial Wellness

Salus is not just about providing microloans; it’s about fostering long-term financial well-being, Chemplavil said. He highlighted the “Stress Score” feature, which leverages member data to proactively identify individuals experiencing financial stress. This allows credit unions to offer timely support, connecting members with resources such as financial counseling or relevant loan products. “With Stress Score, we take data and turn it into actionable insight for credit unions that are trying to reach their members in need,” Chemplavil noted.

Collaboration and Community: Building a Better Future

Collaboration is key to Salus’ vision. Chemplavil emphasized the shared mission of credit unions and fintechs in helping individuals achieve financial success. Salus is actively exploring partnerships to create a more comprehensive suite of financial wellness offerings.

By focusing on cash flow underwriting, seamless integration, and a member-centric approach, Salus is enabling credit unions to effectively address the growing need for accessible and responsible microloan options, transforming the landscape of short-term lending and empowering individuals on their path to financial well-being.