How To Start A Payday Loan Business

While researching often used terms related to payday loans I came across the term "how to start a payday loan business". While its not very popular (its searched for roughly a dozen times a day), the search term returns nearly 9,000 pages on google!

While the first 2 links seem legitimate sites to the same company offering a $300 how-to manual (which seems pretty comprehensive and claim you can make 30% return on your money), the subsequent links are spam sites from California State University at San Marcos that have invisible text (white text and white background) and links to various other pay day loan sites. Amazing how they're the 3rd link. I imagine having a .edu domain has something to do with it.

Anyway, there are two ways to get into the payday loan business. One is to start from scratch, and the other is to buy an existing business or franchise. Startup costs can be pretty high and include setting up a retail shop, office furnishings, broadband Internet, a computer and a sizable amount of cash for lending. If an existing business is purchased, the advantage is the business has a client base. The client base is important, as many of these borrowers will be repeat customers for a surprisingly long number of months. They will pay off the loan and then come back in a few months and do it again. These customers usually have a very good source of funds like a pension or some sort of structured payout.

The returns can be pretty substantial, but they are not without risk. Since no credit check is performed, its wise to make sure the borrower doesn't already have a payday loan.

Its also advisable to be cognizant of the local lending laws since any breach of these could result in severe penalties. Collecting delinquent accounts is also part of the business and the success in this area will directly affect the profit of the company.

Referrals are a great way that existing customers can help to expand your business. Giving them a financial incentive to recommend you to their friends will make getting new customers an easier proposition.

Having a location in a high foot traffic area is beneficial since you're essentially in the retail lending business. If you don't have many other attractions nearby, you will have to do much more advertising to bring in new clients.

In conclusion, stating a payday loan or cash advance business can be a profitable business if proper steps are taken to maximize success.