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Exclusive: Earned wage access provider Rain secures $300M credit facility

Illustration of a hand holding an umbrella with a  hundred dollar bill on it under a rain cloud

Illustration: Sarah Grillo/Axios

Rain, an earned wage access platform for employers, secured $300 million in a credit facility from Clear Haven Capital Management, the company tells Axios exclusively.

Why it matters: The product offers workers an alternative to payday loans and high-interest credit cards while providing a retention tool to employers.

By the numbers: The $300 million represents a sixfold increase in facility capacity, according to Rain co-founder Fred Choquette.

  • "We've gotten very efficient in how we manage your capital, so we actually think that we'll be able to support 10 times our volume," Choquette says.
  • That would take it from about $1 billion in annual disbursements to about $10 billion.

How it works: Rain partners with employers to allow workers to get paid after each shift instead of having to wait until their usual payday.

  • Employees can access their money three ways: free through an ACH direct deposit with a one-to-three-day settlement; by using a Rain debit card; or for a fee (around $3) have wages instantly sent to their bank account.
  • Rain has integrated with most major payroll and timekeeping systems in the U.S., giving employers the files they need for an employee to get paid the remaining wages, net of any earned wages delivered by Rain.
  • Its system also automates repayment from the employer back to Rain, leading to a loss rate of close to zero.

Separately, Rain also provides a suite of financial wellness features and financial literacy tools to help employees build credit, manage their spending, and lower their debt.

  • "We think success at the user level looks like needing earned wage access less and less over time," Rain co-founder Alex Bradford says.
  • Meanwhile, Rain says about 30% of workers at its partners adopt the earned wage access benefit, which leads to increased retention and productivity.

State of play: Rain started at the onset of the COVID-19 pandemic, and many initial customers were employers of frontline workers in the quick-service restaurant industry.

  • Since then, it's expanded to serve several different verticals that primarily employ shift or hourly workers.

The big picture: "Americans spend something like $170 billion every year ... in the form of predatory financial products like overdraft fees, payday loans, and high-interest credit cards," Bradford says.

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