Grab’s Partner Cash Advance: Benefit or Burden?

Grab officially launched the Partner Cash Advance programme in January 2023, under our broader partner welfare programme. Our intent is to help Grab driver- and delivery-partners have better access to credit to manage cash flow needs in emergency situations or when they have urgent larger-ticket expenses to bear.

We've received good feedback on Partner Cash Advance from our partners, as well as questions about the programme. We answer them here:

1. Why did Grab roll out this programme?

Many of our driver- and delivery-partners have shared that getting short-term support for their cash flow needs is challenging for them. As we studied the various types of loan products in the market today, we realised that none of them could adequately serve the needs of gig workers for several reasons. These include:

• Personal bank loans: These are out of reach for many partners because they don’t earn a fixed income, nor do they have a credit score. Hence, traditional financial institutions cannot trust that they will be able to repay a loan, rendering them ineligible. 
• Moneylenders: Partners may be more likely to secure a loan with licensed moneylenders, but this comes with a heavy financial burden. Licensed moneylenders can charge up to 14% per month (4% p.m. interest and 10% admin fee), and unlicensed moneylenders can charge way more. Combined with rolling interest and late fees, these products could trap partners in ballooning debt and end up putting them in a worse financial state.

This is the gap we seek to plug with the Partner Cash Advance programme.

2. How does Grab determine who is eligible for the programme?

We want to be responsible lenders and ensure the financial security of our partners, so we have implemented strict qualifying criteria. Driver and delivery-partners who fulfill the following requirements will have a higher chance of being eligible:

• They have driven with Grab for at least 3 months and were active in the past 1 week
• They have average monthly Grab earnings of at least SGD 1,000 
• They have met Grab's internal credit risk assessments

3. Is the programme’s admin fee too high?

We understand why it could be seen that way – the average admin fee of ~1.5% per month effectively works out to an 18% fee in a year. This might be slightly higher than a bank’s interest rate, but it is significantly lower than that of realistic alternatives such as moneylenders and pawnbrokers, as mentioned above. 

Here’s a quick illustration:

Scenario 1

• Our partner applies for a $1k advance to be paid over 6 months, at a one-time fee of 1.5% per month
• We don’t charge any other fees, so the total charge our partner pays is the one-time fee = 1.5% x $1k x 6 months = $90

Scenario 2

• Now let’s say our partner goes to a licensed moneylender to borrow the same amount for the same length of time
• Moneylenders typically charge an interest rate of 4% per month with a 10% rollover charge
• Our partner would thus end up paying $840 in fees for the exact same loan! (being (4% + 10%) x $1k x 6 months = $840)

We chose to go with a one-time admin fee because we felt this was the best way to prevent our partners from incurring any ballooning debts with us, even if they encounter hardship and require payment holidays / loan restructurings. Thus, our admin fee needs to cover the cost of potential defaults, restructured loans, as well as tech development and program administration.

Some have asked if our one-time admin fee can be lower. While it’s not possible at the moment, we will actively monitor the non-payment rates to determine the best range. Our goal, after all, is to offer this financial solution to our partners as sustainably as possible. 

4. Is this a way to retain or bind your partners to your platform?

Not at all. Partners who take up a cash advance are not obliged to drive or deliver with Grab while they are completing their repayments. 

Some have also aired concerns that partners may be disadvantaged when getting bookings on the Grab platform if they miss repayments. We want to assure you that this does not happen - their payment behaviour will in no way affect their rating or earning opportunities on the platform. 

5. How else will you ensure your programme is safe for your partners? 

From the get-go, we have made it a priority to have robust guardrails in place for the Partner Cash Advance programme. Many of them have been mentioned above but here’s a summary of how we approach protecting our partners’ financial well-being:

• Stringent eligibility criteria which helps increase the possibility of them keeping a healthy balance between earning a living and managing repayments on the platform as much as possible. Details of the criteria can be found in Question 2.
• A strict cap on the amount they can borrow, so that their qualified cash advance amount is well within their income range. We can track their income range through their driving behaviour and earnings as reflected in-app. We also conduct bankruptcy checks when they apply for the programme to ensure we are lending responsibly. 
• We only charge a one-time admin fee, with no other interest charges or fees. Thus partners will not face ballooning loan balances with Grab, regardless of their payment behavior. 
• We help our partners in the event of payment difficulties. If they are unable to complete repayments due to health and medical issues, the inability to work or other exceptional situations, we can provide assistance to them on a case-by-case basis.
• We allow early repayments with no penalties, so they have the option of paying off their outstanding amounts faster if they are able to do so.

6. How will Grab educate your partners to borrow only when necessary? 

Financial literacy is a topic close to our hearts. We understand the importance of providing financial education to our partners and ensuring that they borrow only when they really need to. We are actively improving the user flow so that they are given the right financial tips and have access to the right considerations, while they are making a borrowing decision. This is above and beyond the robust financial literacy courses already available to them on GrabAcademy.

We spoke to partners who have tried the programme to get their feedback, here’s what a few of them have to say:

"I was very stressed when the hospital and clinic called me up a few times to pay my bills. The day after I used partner cash advance, my life felt much better. I also didn't have to worry about people calling me or coming to my house to ask for money. I experienced it before with moneylenders, and it made me very scared. Now I just set aside $50 first thing in the morning for the weekly payments, as compared to having to pay back more than $300 every week when I borrowed from moneylenders.” - Aishah, Grab driver-partner since 2014

“The loan has helped me purchase urgent school supplies for my children. It was easy to apply on (the) Grab (app) and I got the amount I needed very quickly, not having to wait up to one week. I didn’t have to think so much about where to get this money and put more stress on myself. Some of my friends always have headaches at the end of the year when they need to buy school items and they end up bringing their gold to the pawnshop to get a loan and losing 40% of the value.” - Rizal, Grab driver-partner since 2017