How To Start A Payday Loan Business

Payday loan companies will give out money to customers who need cash in between their paychecks without having to submit a lot of paperwork and relying on their credit score. These are short term loans in which the paycheck becomes the collateral. They can be risky for both the customer borrowing the loan and the lender.

Business Plan

When starting any business you need to set up a business plan. This should include a list of assets and information on potential clients. Explain how you can attract customers by advertising and what kind of money you can make throughout the years that you are open.

Corporation

Find out if your state allows payday loans. There are some states, like Georgia, that have banned these companies. If they are than you should think about turning it into a corporation. This will help to protect any personal assets you have. Visit your state department of revenue and ask for a copy of the registration paperwork. An attorney will help to incorporate it for you for an amount between $50 to $1,200.

License

Contact the agency in your area that will provide you with a license. A representative can send you an email with an application. You will have to spend a few hundred dollars for the license application. Keep in mind that this money cannot be refunded to you.

Advertise

The only way you can make your business known is to set up different forms of advertising. Invest some of the money you received from your lender to put out ads in newspapers, on the radio, or on the television. You might also want to consider using billboards to reach large amounts of people at one time.

Pricing

In order to make a profit you must set the right price or interest rate for a loan. Keep in mind that these short term loans are risky and the money you make comes only from the interest rate. It is for this reason that you will have to charge them more than a bank would. Speak with the payday loans in the area and ask how much they charge.