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Are you thinking about setting up your own loan business? It’s not that different from setting up any other business. You will need a plan, a source of capital, a legal structure, a website, and a registered business name and brand.
Here are some tips that will help you get started.
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1. Create a Business Plan
All businesses need a business plan, and this is also true for a loan business. Your business plan should include an executive summary, a description, a market strategy, a competitive analysis, a design and development plan, an operations/management plan, and an analysis of your current financial situation.
If you are not familiar with any of these terms, don’t worry. The Internet has plenty of examples that you can follow. Just look at the business plans of loan companies and small banks.
Of course, if you already have a lot of experience creating business plans, then you won’t need to study other business plans. You can start creating yours right away.
2. Finance Your Business
Even a loan business needs financing, so that’s your next step. Most people go to a bank, but you can also secure a business loan with a favorable interest from the Small Business Administration or a local organization (if you’re a member of one).
If you don’t want to take out a loan, then you could find a silent partner. This is someone who will give you the cash you need in exchange for a cut in your business’s monthly income. If that doesn’t work, you could look for a private investor to lend you the money. For example, turn to a friend or relative.
3. Take Care of the Legal Details
A loan business has to comply with all kinds of legal issues to prevent unfair and usurious practices. Start by hiring an attorney if you already don’t have one. You should also determine the legal structure of your new company. For instance, will your loan business be a sole proprietorship, a partnership, an LLC, a corporation, or a non-profit?
If you don’t know how to take care of legal issues, you might want to consult the legal policies of other businesses and companies. Copy those parts that fit your situation.
4. Create a Website and Marketing Campaign
You will need to promote your new loan business, so get started with your marketing campaign as early as possible. If you prefer to promote your services online, you will need to set up a website.
5. Register Your Loan Business
Finally, you will need to go through the formalities of registration. In the United States, this process is known as “Doing Business As.” However, all countries have their own rules with regard to business registration. So pay attention to local laws with regard to registering your loan business.
Once you have registered your business name, you will need a tax identification number, as well as state and local registrations. Moreover, you might also need to obtain business licenses before you get started.
There are many types of loan businesses. These include providers of car title loans, payday lenders, and mortgage brokers to name a few. But regardless of which type of lending business you want to set up, remember that you cannot avoid any of the steps mentioned here. You will need to plan, prepare, set up, and register your loan business just like any other.