Interested in small money lending business ideas? If YES, here is how to start a money lending business with no money and no experience and some basic lending business requirements.
How to Start a Small Money Lending Business
Starting a money lending business does not have to be an impossible idea. You will discover that my claims are not fraudulent if you can take your time to read through this post. Most commercial banks make money in two major ways. They give out grants and small business loans at particular interest rates for instance, AB – MFB Microfinance Start up loans. They also lend money to investors using funds that you deposit with them through cash, check deposit or electronic money transfer. I won’t be making reference to commercial banks’ subsidiary functions like giving out credit letters and Forex transactions.
GUIDE: HOW TO START A LOAN COMPANY
CASH LOAN BUSINESS PLAN – LENDING BUSINESS IDEAS
The truth is most of these functions are too technical for your own money lending business. Good news is many lending business ideas would be able to receive cash and give out advance money and will duly registered. Here is how to open a small money lending business.
What Do I Need To Start A Money Lending Business
– Close Monitoring
– Capital Base (Less Than 100k)
How To Set Up a Money Lending Business
It is difficult to start your own money lending business that caters for the whole country with respect to your current resources. This is the reason you should think about localization. You will later need an official base where new and existing clients can come to get their issues sorted out. The place must be conspicuous, accessible and presentable. Good affordable furniture and a PC with the necessary money lending business software installed are important too.
How To Register A Money Lending Business
You will need to get your business register and secure the appropriate license. Requirement for lending out funds are country-specific but are generally lesser that those for establishing commercial and micro-finance banks.
Who Should I Target?
Since you don’t have what it takes to lend to big companies and corporations like P&G, MTN, BAT, SHELL and others; you should target those investors and individuals at the bottom of the economic pyramid. Small salary earners, petty investors, market women and artisans are good market to generate client base for your money lending business.
What Is The Best Money Lending Business Strategy?
Although there is not shortage of customers for money lending business, you cannot take on everybody. This is due to what is called credit appraisal. To take care of fund receipt and repayment process, each client should be made to deposit at least 20% of loan sought. To protect you money, enable daily and weekly loan repayment and these people have a high tendency to become less aware of their obligations after receiving the loan.
Studying trends of operations and advertising in micro-finance banks and using it to develop marketing strategies for money lending business is recommended. You don’t have to hire a lot of people for a start. As your money-lending business expands its capital base, you would need to employ more people to do the footwork. If you want to start with say 90k, loan out 20k to each clients. That is like 4 clients already. Don’t make the mistake of giving out all your funds at once. No business ever does that.
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