How should a company handle employees who keep from loan sharks, even when the employer offers a far cheaper alternative — a company loan charging only one percent interest, payable within one year through salary deduction? That is the question posed by a reader identified as Blue Lantern in this workplace advice column.

To manage workers who continue to turn to loan sharks despite cheaper options, employers must first identify the root causes. Are there friction points in the current loan system? Is the company dealing with a chronic serial borrower financing an ugly habit? These answers are best discovered by talking to those concerned. Workers may be resorting to loan sharks because of weak personal financial control, magnified by an inefficient company system, privacy issues, or existing conditions that disqualify them from taking another loan.

As a first step, the company may organize regular financial literacy seminars covering basic budgeting and how to avoid high-interest debt traps, with the help of partner banks or other financial institutions. Beyond that, the following approaches may be explored:

1. Bureaucratic delays. Loan sharks deliver instant money with zero questions asked. If a one percent company loan takes several days to process because of extensive requirements, desperate employees in need of emergency cash will bypass it.

2. Privacy issues. Some employees feel ashamed admitting their financial distress to their direct boss, the finance team, or the human resource (HR) department. If these officials must approve personal loan requests, workers will likely seek privacy through loan sharks. One solution is to allow confidential applications through a self-service HR portal or a third-party loan partner.

3. Emergency cash provisions. Improve loan access so employees can obtain quick micro cash advances — for example, a P5,000 maximum — without management having to approve every personal emergency. To avoid abuse, this should be limited to a one-time availment per year, at zero interest, with salary deduction of not more than three months.

4. ATM card confiscation. External loan sharks often demand physical possession of an employee's ATM card so they can have direct access to the payroll account — a practice banks routinely warn account holders against, since a surrendered card and PIN give a third party the same access as the owner. Affected workers should be advised to contact the issuing bank immediately to secure the account and replace compromised credentials, while seeking appropriate legal or financial assistance where necessary.

5. Buyout program. Help a worker escape the predicament by arranging a one-time "reset" loan designed to pay off aggressive external creditors. Allow certain exceptions so a distressed worker can repay the loan over a longer period through payroll deduction. If necessary, help the worker sever ties with the loan shark by filing an affidavit of loss for the ATM card, which the bank needs to issue a replacement card.

6. Workplace ban on lending. Prohibit informal money lending — whether by other employees, external loan sharks, or people conducting similar activities on company time and premises. Ban loan sharks and other collection agents from entering the workplace.

7. Disciplinary measures. Treat employees who act as loan shark agents or operate unauthorized internal lending schemes as violating workplace conduct rules. When left unchecked, the situation contributes to low productivity.

8. Confidential financial counseling. Partner with an external counselor or a non-government organization so that employees with heavy debt issues receive professional advice. Ensure strict confidentiality so the company need not see their details. The arrangement mirrors the confidential third-party counseling model used in employee assistance programs, where the employer facilitates access without seeing individual cases.

Workers' dignity

Avoid shaming and disciplinary threats. Shaming drives people underground, erodes trust, and worsens financial stress — leading to higher absenteeism, lower productivity, and possible resignations. At the same time, employees who borrow money should not be punished merely for being in debt. Those who exploit colleagues, engage in coercive collection, or violate legitimate workplace rules are a different matter and may be subject to proportionate discipline after due process.

When financial anxieties consume an employee's focus, engagement drops significantly. A supportive stance — giving workers easy access to the company's low-interest loan together with practical education — encourages voluntary uptake of the better option. Providing these accessible avenues reassures everyone that asking for help will not jeopardize their standing or career advancement.

More importantly, treating people with dignity protects both employee well-being and organizational culture, delivering lasting results far more effectively than punishment ever could. Ultimately, compassionate financial policies cultivate organizational loyalty, reduce costly turnover, and build a resilient workforce grounded in mutual respect. For employers weighing these measures, progress can be tracked through observable signals — faster loan turnaround, voluntary use of the one percent facility through confidential channels, and the disappearance of collection activity from company premises.

Rey Elbo offers free consultation. Readers may e-mail elbonomics@gmail.com or send a direct message via Facebook, LinkedIn, or X, or visit Anonymity is guaranteed, if requested.