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The number of short-term and high-fee loans that are offered to employees in their workplaces have increased, The Wall Street Journal reported. For the past three years, at least six non-bank lenders have begun to pitch loans to firms and payroll vendors. Citing estimates taken from various lenders, the report said employer-based loan programs are now currently available to over 100,000 employees. Forecasts from company executives revealed that the number could grow in the next few years to reach over 10 million workers.

The companies offering the loans are part of a much larger initiative from shadow lenders to get a significant share in the business that had been the domain of traditional banks, the report said. Since the financial crisis, lenders have imposed stricter lending standards. This has left small firms and individual borrowers with damaged or inadequate credit histories to go somewhere else for their loan needs, the report reasoned.

The report also added that the employer-loan programs usually come with online tools that help borrowers improve their ability to budget. The employers themselves usually offer the loans without levying their own fees. Their aim is to enable their workers to have more financial stability and lower financial stress that can lead to disruptions in the workplace, said the Journal.

Some of the companies that have offered these loans to their employers include Sonic Drive-In restaurants in Phoenix and Arizona Restaurant Systems Inc based in Scottsdale, which enable workers to get loans lasting for two weeks. These loans were said to range from $150 to $500. The fees are anywhere from $8 to $25 in addition to interest. All these go to Think Finance Inc, the lender who gives the loans. The report said that based on the fees, the effective annual percentage rate of these loans range from 100% to 165%.

The Journal also stated that there are different options to repay the loans, but the most common form is by taking automatic payments from the paycheck of the employee.