# If Buffer costs our company nothing, who funds the loans and takes the risk?

> No cost to the employer doesn't mean nobody carries anything. Here's what the employer does, what Buffer does, and what an employee takes on if they borrow.

Topic: Workplace Financial Wellness · Audience: employers and HR leaders

Canonical URL: https://mybuffer.ca/blog/zero-employer-cost-who-takes-risk

## Key takeaways

- Employers pay Buffer no setup, subscription or per-employee fees.
- Employers don't fund loans, make underwriting or credit decisions, carry credit risk, or handle repayment and collections.
- Buffer loans typically carry an APR of 12% to 18%, and eligible employees who repay in full within the 29-day one-time repayment period pay no interest.
- Approval isn't guaranteed, because a benefit that approved everyone would put some employees into debt they couldn't manage.
- Employers still choose to offer the benefit and introduce it to staff, and how they introduce it matters a lot.

No cost to the employer is one of the first things HR and finance leaders hear about Buffer. It's also one of the first things they're right to be sceptical about. Benefits that cost nothing up front sometimes come back later as admin work, legal exposure, or a hard conversation with an employee who can't repay.

So here's the longer answer: who does what in Buffer's model, what the zero cost covers, and where it stops.

## The short answer

Employers pay Buffer no setup fees, no subscription fees and no per-employee fees. They don't fund loans, make underwriting or credit decisions, carry credit risk, or handle repayment and collections. Buffer does those things. Employees who choose to borrow take on a repayment obligation to Buffer.

## Who carries what?

| **Responsibility** | **Employer** | **Buffer** | **Employee (if they choose to borrow)** |
| --- | --- | --- | --- |
| Paying for the program | No setup, subscription or per-employee fees | Operates the program | Repays what they borrow, plus interest if it applies under their loan terms |
| Funding the loans | No | Yes | n/a |
| Deciding who's approved | No | Yes, through underwriting | Decides whether to apply and whether to accept |
| Carrying the credit risk | No | Yes | n/a |
| Repayment and collections | No | Yes | Responsible for repaying on the agreed schedule |
| Making the benefit available | Yes | Supports it | n/a |

Two rows in that table are worth slowing down on.

## Why keep the employer out of credit decisions?

Some employers assume they'd want a say in who can borrow. In practice, staying out of it protects everyone. A manager who knows which employees applied, or who could influence an approval, is in an awkward spot the next time scheduling, discipline or a promotion comes up. Keeping the job and the loan separate removes that conflict before it starts.

Buffer's underwriting considers employment, income and bank transaction history, not only traditional credit scores. Approval isn't guaranteed, and that's on purpose. A benefit that approved everyone would put some employees into debt they couldn't manage.

## Why does repayment handling matter so much?

Payroll deduction is where employer-linked lending most often pulls the employer back in. If loan payments come off the paycheque, the employer is now running part of a credit arrangement. That means processing deductions, sorting out final pay when someone leaves still owing money, and fielding questions it may not be set up to answer.

Provincial employment standards come into it too. In British Columbia, for example, an employer may honour an employee's written assignment of wages only for certain listed credit obligations, like an advance of wages from the employer itself, purchases from the employer, or personal use of employer property. The employer can decline to honour it, and the assignment has to be in writing, according to the [BC government's interpretive guide to the Employment Standards Act](https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/forms-resources/igm/esa-part-3-section-22). Other provinces have their own rules. None of this is legal interpretation, and any employer looking at a payroll-deduction model should get its own advice.

In Buffer's model the employer doesn't handle repayment or collections, so that whole category of admin and risk sits somewhere else.

## So what doesn't zero cost mean?

**Borrowing isn't free for employees.** Buffer loans typically carry an APR of 12% to 18%. Eligible employees who repay in full within the 29-day one-time repayment period pay no interest. Otherwise, interest applies under their loan terms. Buffer doesn't charge penalties or late fees, but a loan is still a loan.

**Employers still have a role.** You choose to offer the benefit and you introduce it to staff, and [how you introduce it matters a lot](https://mybuffer.ca/blog/announce-loan-benefit-without-pressure). A voluntary benefit can easily feel like pressure if it's presented badly.

**It doesn't replace the basics.** No borrowing benefit makes up for fair pay, predictable scheduling, adequate paid leave or a working employee assistance program. Emergency loans help with one specific problem, a cost that arrives before the money does. They're one layer of support.

**It isn't a payroll loan or a wage advance.** Employees aren't drawing their wages early, and the employer isn't the lender.

## What should you ask Buffer, or any provider?

Zero cost is a claim worth testing with anyone. Before you commit, it's reasonable to [ask for written answers](https://mybuffer.ca/blog/questions-before-offering-emergency-loans) on:

- every fee, if any, the employer could ever be charged
- what the employee pays, shown as an APR and as a total dollar amount on an example loan
- what information about employees, if any, the employer provides or receives
- what the employer is expected to do for communications and onboarding
- what happens if an employee leaves while they're still repaying

Those questions apply to every provider, not just us.

In Buffer's model, zero employer cost means you pay no fees and take on none of the lending. There's no funding, no credit decision and no credit risk on your side, and you don't handle repayment. What's left for you is the part only an employer can do well, which is offering the benefit thoughtfully and leaving the choice with employees.

## Questions and answers

### Who funds the loans and carries the risk?

Buffer does. Employers don't fund loans, make underwriting or credit decisions, carry credit risk, or handle repayment and collections. Employees who choose to borrow take on a repayment obligation to Buffer.

### Is borrowing free for employees?

No. Buffer loans typically carry an APR of 12% to 18%. Eligible employees who repay in full within the 29-day one-time repayment period pay no interest. Otherwise, interest applies under their loan terms. Buffer doesn't charge penalties or late fees, but a loan is still a loan.

### Is Buffer a payroll loan or a wage advance?

No. Employees aren't drawing their wages early, and the employer isn't the lender. In Buffer's model the employer doesn't handle repayment or collections either.

### What does Buffer look at when someone applies?

Buffer's underwriting considers employment, income and bank transaction history, not only traditional credit scores. Approval isn't guaranteed.

## Sources and references

1. [Assignments - Act Part 3, Section 22 (Interpretive Guide to the Employment Standards Act and Regulation)](https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/forms-resources/igm/esa-part-3-section-22) · Government of British Columbia

*Product facts in this article were supplied by Buffer Financial Inc. This article is general information, not personal financial advice or an offer of credit.*