Determining the best way to start a business can be a tricky endeavour, especially if you are new to entrepreneurship. Starting a money lending business is rife with various laws and regulations that need to be fully understood before you can officially open your doors for business. Proper planning will help ensure the success of your money lending business and avoid the possibility you will become another small business failure statistic. Everything from outlining a company vision to implementing infrastructure systems should be established to promote the health of your business.
- Skill level:
- Moderately Challenging
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Things you need
- Business Plan Book
Conceptualise your business. Take stock of other lending businesses and what you like and don't like about them. Make a list of pros and cons, and begin brainstorming things you would like to change relative to your competition. As part of your preparation, research possible avenues of credit extension or starting capital. This will likely be the biggest hurdle in the implementation of your business objectives unless you are self-funded. Find out how other lending company entrepreneurs in your area sought adequate capital.
Write a business plan. The best way is to get a basic how-to model of how to structure your business plan. When crafting a plan for a lending business, be very detailed in structuring your procedures and policies section as this is what investors and potential loan officers will be looking at to ensure the security of any funds you are given. Lending businesses can be risky given the fluctuating nature of the credit industry, and you must ensure your relative safety to potential investors.
Seek out potential investors or loan opportunities for your business utilising the research you gathered from the first step. This is an integral step to getting your business off the ground. Unless you are self funding your start-up, you will need to ensure your business plan is thorough and totally complete. This will be your veritable ticket into making your business idea a reality so be wise about whom you approach for investment.
Procure an attorney and CPA to help you navigate the legal aspects of a money lending business. This particular industry is rife with various legalities that can be difficult to track without the help of knowledgeable industry professionals. It is imperative you have your business bonded and secured through the proper state channels. Consider keeping a CPA and attorney on retainer, particularly if you are unfamiliar with the lending industry. They should be able to field any questions regarding laws and regulations surrounding lending, so shop around for knowledgeable professionals.
Secure a line of credit from a financial institution. This should be discussed with your CPA and attorney as you want to ensure that you find the most attractive and manageable deal for your particular business needs. Negotiate an interest rate that will allow you to extend loans at a reasonable higher interest rate so you can begin making a profit immediately on your investment.
Find a suitable location for your business. If you plan to operate your lending company from your residence, you must establish a separate area of your home that will only be utilised for business. Some states will not allow you to operate a lending business from a residence so you may have to secure a separate space for your business.
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