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How to Start a Money Lending Business

Last Updated: January 8, 2024 Fact Checked

This article was co-authored by Clinton M. Sandvick, JD, PhD . Clinton M. Sandvick worked as a civil litigator in California for over 7 years. He received his JD from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013. There are 15 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 320,125 times.

If you want to start a money lending business, you will need to decide what kinds of loans you want to make—payday, mortgage, or installment loans. You may choose to start a lending business using only your own money or money from a group of investors. Starting a money lending business will require that you develop a business plan and gain the necessary government licenses.

Preparing to Start the Business

Step 1 Choose a company name.

  • You should search your state’s business filing office to find out if a name has already been taken.

Step 2 Draft your business plan.

  • Executive summary. You will need to briefly describe the nature of your business and why you think it will be successful. The executive summary should contain your mission statement as well as company information. As a startup, you should focus on explaining how your experience and background will contribute to the business’s success.
  • Company description. Explain the nature of the business, your intended market, and the market needs your lending business will satisfy. For example, you might want to meet the small loan needs of your community, which are underserved.
  • Also identify your competitors and describe their strength or weakness in the market.
  • Product line. Describe the loans you want to make. You should explain the advantages of your loans over those of competitor’s.
  • Marketing and sales. Discuss your overall sales strategy, including your plans for growth. For example, you may hope to grow geographically, offering your loans to a larger community. Or you might hope to grow by offering additional types of loans to your current market.
  • Financial projections. Based on your market analysis, you should forecast your projected finances for five-years out.

Step 3 Settle on financing.

  • Some money lenders have dipped into their retirement accounts, such as their IRAs and 401(k) accounts, to fund their loans. Experts encourage money lenders who do this to understand the risks that they are taking. For example, loans might not be repaid, in which case you could lose a large percentage of the loan amount. [3] X Research source
  • If you seek funding from investors, then you will need to work closely with a lawyer to draft a prospectus to share with investors. State and federal laws tightly regulate how you advertise securities to potential investors. Your lawyer will need to be experienced in securities regulation.

Step 4 Draft underwriting criteria.

  • Generally, you will assess risk by gathering information about the loan applicant’s financial history. For example, you would want to look at their income, FICO score, and other debt load. [4] X Research source

Step 5 Attend seminars.

  • To find an experienced business lawyer, you can visit your state’s bar association website, which should run a referral program.
  • You can research any attorney by visiting his or her website. Look for experience with business formation, as well as banking or lending experience. If you are starting a lending business for real estate, then look for an attorney who has real estate experience as well.

Step 7 Buy your domain name.

  • You can purchase your domain name from various registrars. Search the internet for “where to purchase domain name” and look at the different companies that provide this service.

Registering Your Business

Step 1 Incorporate.

  • To incorporate, you will have to file articles of incorporation with your state. Your attorney should be able to get them, or you can get them yourself from your Secretary of State. [6] X Trustworthy Source U.S. Small Business Administration U.S. government agency focused on supporting small businesses Go to source

Step 2 Apply for necessary licenses.

  • In addition to state licenses, you may need municipal or local licenses. You must contact your state business licenses office and search for applicable licenses or permits. The Small Business Administration has links to each state’s office at https://www.sba.gov/content/what-state-licenses-and-permits-does-your-business-need .

Step 3 Register your business name.

  • Not every state requires that you register a “doing business as” name. You can check registration requirements with your Secretary of State office as well as with your county clerk’s office. [8] X Trustworthy Source U.S. Small Business Administration U.S. government agency focused on supporting small businesses Go to source

Step 4 Register with the Securities and Exchange Commission (SEC).

  • You should check with your attorney whether or not you need to register the securities and which agency you need to register with.

Step 5 Get a business tax identification number.

  • You can apply for an EIN online. This is the preferred method. [9] X Trustworthy Source Internal Revenue Service U.S. government agency in charge of managing the Federal Tax Code Go to source To start the application, visit the EIN Assistant at https://sa.www4.irs.gov/modiein/individual/index.jsp .
  • You can also apply by mail or fax by printing off Form SS-4 available at http://www.irs.gov/pub/irs-pdf/fss4.pdf . To find out where to mail or fax your form, you should visit the IRS website at https://www.irs.gov/filing/where-to-file-your-taxes-for-form-ss-4 .

Step 6 Know debt collection laws.

  • Under federal law, specifically the Fair Debt Collection Practices Act, you are prohibited from harassing or abusing the customer that owes you money. [10] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source Also, you cannot use false, deceptive, or misleading means to collect any debt. [11] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source If you fail to obey federal law, you and your business could face stiff civil penalties. [12] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source
  • Each state will also have laws prohibiting certain debt collection activities. For example, in Iowa, you are prohibited from making illegal threats or from coercing or attempting to coerce a customer into paying a debt. [13] X Research source

Step 7 Hire a compliance professional.

  • To find a compliance professional, you can ask your lawyer for recommendations. Alternately, if you met anyone at a national conference or panel, you could contact them for a recommendation.

Launching Your Business

Step 1 Rent office space.

  • Rent is often one of the largest expenses for a new business. Accordingly, you should budget and not spend more than you can afford.
  • Try to negotiate a one- to two-year lease with an option to renew. Because you don’t know if your business will be successful or not, you shouldn’t sign an initial lease for longer than that.
  • Find out what other expenses you might incur in addition to the rent. For example, you could have to pay for maintenance and repair, upkeep, and utilities.
  • Negotiate some add-on clauses, such as a right to sublease or an exclusivity clause (which prevents a landlord from leasing to a direct competitor at the same location).

Step 2 Open a bank account.

  • Business tax identification number (or Social Security Number if sole proprietor)
  • Business license
  • Business name filing document
  • Articles of incorporation with corporate officers listed (for a corporation)

Step 3 Create contracts.

  • If you are lending money for real estate, you will need not only the promissory note but also the mortgage note. Lenders working in the real estate field also typically use other documents, such as Letters of Intent (LOI) and preliminary title reports. [16] X Research source You should ask your attorney or compliance professional about what other contracts are necessary.
  • For more information on loan agreements, see Write a Loan Agreement.

Step 4 Advertise.

  • If you want to make a few loans to acquaintances or people in your neighborhood, you could rely on word of mouth. However, if you want to reach a larger market or grow more quickly, then you should consider advertising in newspapers or online.
  • You should also consider advertising in the form of imprinting your company name on pens, paper, calendars, and other giveaway items.

You Might Also Like

Prepare a Bill of Quantities

Expert Q&A

  • Some experts recommend that you lend locally, preferably within 100 miles of your physical location. [17] X Research source Thanks Helpful 0 Not Helpful 0
  • Running a collateral-free loan is an added advantage to run a successful lending business. Thanks Helpful 25 Not Helpful 4
  • You should not underestimate the amount of work it will take to start a money lending business. If you find it difficult to write a business plan, you might want to rethink your objectives. Thanks Helpful 14 Not Helpful 5

money lending business plan doc

  • ↑ https://www.profitableventure.com/starting-a-micro-money-lending-business/
  • ↑ https://www.sba.gov/writing-business-plan
  • ↑ https://www.investopedia.com/terms/l/loan.asp
  • ↑ http://www.creditinfocenter.com/mortgage/guidelines.shtml
  • ↑ https://www.sba.gov/business-guide/launch-your-business/register-your-business
  • ↑ https://www.sba.gov/content/corporation
  • ↑ https://www.sba.gov/content/register-your-fictitious-or-doing-business-dba-name
  • ↑ https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
  • ↑ https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text
  • ↑ http://www.nolo.com/legal-encyclopedia/iowa-fair-debt-collection-laws.html
  • ↑ https://www.pacificprivatemoney.com/6-tips-for-a-successful-private-lending-practice/
  • ↑ https://www.sba.gov/business-guide/manage-your-business/buy-assets-equipment
  • ↑ http://www.fortunebuilders.com/becoming-private-money-lender-part-2-breaking-private-money-loan/
  • ↑ http://www.pacificprivatemoney.com/6-tips-for-a-successful-private-lending-practice/

About This Article

Clinton M. Sandvick, JD, PhD

To start a money lending business, you’ll need to draft a business plan and obtain the necessary licenses by completing the paperwork required by your state. Your business plan will need to include the types of loans you want to make, such as payday or mortgage, and strategies for how to grow your business. That way, you can attract potential investors, which is typically less risky than using your own savings. You should, however, work with an attorney experienced in securities to ensure you acquire your investments legally. Your lawyer can also help you apply for the needed licenses and register your business as a corporation, sole proprietorship, or whichever type of company you choose to be. For more advice from our Legal co-author, like how to advertise your new business, keep reading! Did this summary help you? Yes No

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Sample Micro Money Lending Firm Business Plan

Micro money lending business plan pdf sample.

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 referring 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. The good news is many lending business ideas would be able to receive cash and give out advance money and will duly be registered. Here is how to open a small money lending business.

What Do I Need To Start A Money Lending Business

– Education – Passion – 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 to the whole country considering 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. The requirement for lending out funds are country-specific but are generally lesser than 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 a good market to generate a client base for your money lending business.

What Is The Best Money Lending Business Strategy?

Although there is no shortage of customers for the money lending business, you cannot take on everybody. This is due to what is called credit appraisal. To take care of the fund receipt and repayment process, each client should be made to deposit at least 20% of the loan sought. To protect your 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 client. That is like 4 clients already. Don’t make the mistake of giving out all your funds at once. No business ever does that.

Call it whatever you like. Giving out loans as money lending business ideas, I call it smart banking 🙂

MONEY LENDING BUSINESS PLAN EXAMPLE

Here is a sample business plan for starting a micro-lending company.

If you are reading this, then I will agree that you are interested in starting a money lending business. So many have gone into this business and have greatly improved their status and their lifestyle, and in a very large way, they have helped those making use of their services.

Money is an essential part of living, sad though, humans will not always have the exact amount needed, and at such moments, they might need to borrow to sort the urgent situation they are in out, as a moneylender, that’s where your work comes in.

The way humans look at the idea differs, some see it as a good option, while others see it as something bad. Either way, only those who have once tried it can agree that the money lending business is a very good one.

The reward of starting a money lending business is unimaginable, your interest will keep growing, and you will always have people who need your services, some will pay back before the expected day; still, you will get your complete interest.

In this article, we are going to provide you with a guide that will help you in your endeavor to write your award-winning money lending business proposal sample which will help you get reasonable and willing investors to back your business up.

Here are the essential subheadings that must be included in your business plan to make it an award-winning and complete business plan.

  • The Introduction Or The Overview Of The Industry

The Executive Summary

  • Risk And Strength Analysis

The Market Analysis

The Competition

  • The Sales And Marketing Strategy
  • Financial Analysis And Forecast
  • Sustainability And Expansion Strategy

Let us now discuss in detail how you can develop each of these points to get a unique business plan

Overview Of The Industry

The introductory part of the business plan is the part where you will be writing about the entire shape of the local and international money lending business, in this part, you need to provide a brief history of the money lending industry.

In this section of your money lending business plan, you will need to provide brief information about the company and the people setting it up. In this section too, you will need to provide the vision of the company as this helps your investors to see if there are plans for the future or not. Most prefer using terms like ‘’ to become a leading brand in the world’’

Your business mission will also be discussed in this section as this very important if you will get reasonable investors for your business. Your business structure is also fundamental, and as such it will be discussed in this part. Your structure will go a long way in defining your future so you must develop this very well.

The key roles to be filled will include Chief Executive Officer (CEO), Accountant, Sales, and Marketing Agent, Receptionist, etc.

Risk and Strength Analysis

In this section of your business plan, you will need to write about your understanding and analysis of your Strength, Weakness, Opportunities, and Threats This is popularly referred to as the SWOT ANALYSIS.

Your strength might involve the latest technology that will help you run a secure money lending business; your threats might be the effect of economic instability or late payment on the part of the borrowers.

This part is one of the essential parts of your business plan. The market analysis segment will prepare you for what you will meet in the money lending market. Your understanding of the business will be brought to the test to see if you have the basic needed understanding. There are trends that the market follows, some forces that define the activities of the market, the role of the economy, and the government in the business.

In this part, you will define your target market, those who will be using your services. Your services will be need by virtually everyone especially students, business owners, industries amongst others.

In this section, you will need to show that you understand the level of competition in the market, and your plans to succeed in the light of these competitions. Your competitive advantage will also be discussed. Your competition might include banks offering loans.

The Sales and Marketing Strategy

In this section, your strategy for advertising and publicizing your business to people both far and wide will be scripted, those mediums like social media, use of news media, and another advertising medium will be discussed.

Your interest rate or how much people will be charged for using your services will also be discussed.

Financial Analysis and Forecast The finance part of your business is very important. For that reason, you need to take this part seriously. Your source of income and the expected income will also be discussed. Other important points include your expenses and the total cost to be incurred, your projected profit for a set period (usually within 5 years)

Sustainability and Expansion Strategy

Your plans to and expand your money lending business will be discussed in this part.

At this point in your money lending business plan, you will be expected to summarise the entire content of the business plan and also include your concluding remarks.

Related posts:

  • Peer to Peer Lending Returns – How Much Can You Make?
  • Sample Micro Distillery Business Plan
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How to Write a Successful Business Plan for a Loan

Lisa Anthony

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

Table of Contents

What does a loan business plan include?

What lenders look for in a business plan, business plan for loan examples, resources for writing a business plan.

A comprehensive and well-written business plan can be used to persuade lenders that your business is worth investing in and hopefully, improve your chances of getting approved for a small-business loan . Many lenders will ask that you include a business plan along with other documents as part of your loan application.

When writing a business plan for a loan, you’ll want to highlight your abilities, justify your need for capital and prove your ability to repay the debt. 

Here’s everything you need to know to get started.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

A successful business plan for a loan describes your financial goals and how you’ll achieve them. Although business plan components can vary from company to company, there are a few sections that are typically included in most plans.

These sections will help provide lenders with an overview of your business and explain why they should approve you for a loan.  

Executive summary

The executive summary is used to spark interest in your business. It may include high-level information about you, your products and services, your management team, employees, business location and financial details. Your mission statement can be added here as well.

To help build a lender’s confidence in your business, you can also include a concise overview of your growth plans in this section.

Company overview

The company overview is an area to describe the strengths of your business. If you didn’t explain what problems your business will solve in the executive summary, do it here. 

Highlight any experts on your team and what gives you a competitive advantage. You can also include specific details about your business such as when it was founded, your business entity type and history.

Products and services

Use this section to demonstrate the need for what you’re offering. Describe your products and services and explain how customers will benefit from having them. 

Detail any equipment or materials that you need to provide your goods and services — this may be particularly helpful if you’re looking for equipment or inventory financing . You’ll also want to disclose any patents or copyrights in this section.

Market analysis

Here you can demonstrate that you’ve done your homework and showcase your understanding of your industry, current outlook, trends, target market and competitors.

You can add details about your target market that include where you’ll find customers, ways you plan to market to them and how your products and services will be delivered to them.

» MORE: How to write a market analysis for a business plan

Marketing and sales plan

Your marketing and sales plan provides details on how you intend to attract your customers and build a client base. You can also explain the steps involved in the sale and delivery of your product or service.

At a high level, this section should identify your sales goals and how you plan to achieve them — showing a lender how you’re going to make money to repay potential debt.

Operational plan

The operational plan section covers the physical requirements of operating your business on a day-to-day basis. Depending on your type of business, this may include location, facility requirements, equipment, vehicles, inventory needs and supplies. Production goals, timelines, quality control and customer service details may also be included.

Management team

This section illustrates how your business will be organized. You can list the management team, owners, board of directors and consultants with details about their experience and the role they will play at your company. This is also a good place to include an organizational chart .

From this section, a lender should understand why you and your team are qualified to run a business and why they should feel confident lending you money — even if you’re a startup.

Funding request

In this section, you’ll explain the amount of money you’re requesting from the lender and why you need it. You’ll describe how the funds will be used and how you intend to repay the loan.

You may also discuss any funding requirements you anticipate over the next five years and your strategic financial plans for the future.

» Need help writing? Learn about the best business plan software .

Financial statements

When you’re writing a business plan for a loan, this is one of the most important sections. The goal is to use your financial statements to prove to a lender that your business is stable and will be able to repay any potential debt. 

In this section, you’ll want to include three to five years of income statements, cash flow statements and balance sheets. It can also be helpful to include an expense analysis, break-even analysis, capital expenditure budgets, projected income statements and projected cash flow statements. If you have collateral that you could put up to secure a loan, you should list it in this section as well.

If you’re a startup that doesn’t have much historical data to provide, you’ll want to include estimated costs, revenue and any other future projections you may have. Graphs and charts can be useful visual aids here.

In general, the more data you can use to show a lender your financial security, the better.

Finally, if necessary, supporting information and documents can be added in an appendix section. This may include credit histories, resumes, letters of reference, product pictures, licenses, permits, contracts and other legal documents.

Lenders will typically evaluate your loan application based on the five C’s — or characteristics — of credit : character, capacity, capital, conditions and collateral. Although your business plan won't contain everything a lender needs to complete its assessment, the document can highlight your strengths in each of these areas.

A lender will assess your character by reviewing your education, business experience and credit history. This assessment may also be extended to board members and your management team. Highlights of your strengths can be worked into the following sections of your business plan:

Executive summary.

Company overview.

Management team.

Capacity centers on your ability to repay the loan. Lenders will be looking at the revenue you plan to generate, your expenses, cash flow and your loan payment plan. This information can be included in the following sections:

Funding request.

Financial statements.

Capital is the amount of money you have invested in your business. Lenders can use it to judge your financial commitment to the business. You can use any of the following sections to highlight your financial commitment:

Operational plan.

Conditions refers to the purpose and market for your products and services. Lenders will be looking for information such as product demand, competition and industry trends. Information for this can be included in the following sections:

Market analysis.

Products and services.

Marketing and sales plan.

Collateral is an asset pledged to a lender to guarantee the repayment of a loan. This can be equipment, inventory, vehicles or something else of value. Use the following sections to include information on assets:

» MORE: How to get a business loan

Writing a business plan for a loan application can be intimidating, especially when you’re just getting started. It may be helpful to use a business plan template or refer to an existing sample as you’re going through the draft process.

Here are a few examples that you may find useful:

Business Plan Outline — Colorado Small Business Development Center

Business Plan Template — Iowa Small Business Development Center

Writing a Business Plan — Maine Small Business Development Center

Business Plan Workbook — Capital One

Looking for a business loan?

See our overall favorites, or narrow it down by category to find the best options for you.

on Nerdwallet's secure site

U.S. Small Business Administration. The SBA offers a free self-paced course on writing a business plan. The course includes several videos, objectives for you to accomplish, as well as worksheets you can complete.

SCORE. SCORE, a nonprofit organization and resource partner of the SBA, offers free assistance that includes a step-by-step downloadable template to help startups create a business plan, and mentors who can review and refine your plan virtually or in person.

Small Business Development Centers. Similarly, your local SBDC can provide assistance with business planning and finding access to capital. These organizations also have virtual and in-person training courses, as well as opportunities to consult with business experts.

Business plan software. Although many business plan software platforms require a subscription, these tools can be useful if you want a templated approach that can break the process down for you step-by-step. Many of these services include a range of examples and templates, instruction videos and guides, and financial dashboards, among other features. You may also be able to use a free trial before committing to one of these software options.

A loan business plan outlines your business’s objectives, products or services, funding needs and finances. The goal of this document is to convince lenders that they should approve you for a business loan.

Not all lenders will require a business plan, but you’ll likely need one for bank and SBA loans. Even if it isn’t required, however, a lean business plan can be used to bolster your loan application.

Lenders ask for a business plan because they want to know that your business is and will continue to be financially stable. They want to know how you make money, spend money and plan to achieve your financial goals. All of this information allows them to assess whether you’ll be able to repay a loan and decide if they should approve your application.

On a similar note...

How to Start a Microlending Company

Microlending is the practice of lending smaller sums of money, typically to those who are unable to obtain funding through an established federal institution. Microlenders typically don’t request any type of collateral before loaning out the money. For-profit institutions may charge a high rate of interest to mitigate financial risks should the borrower default on their loans.

Microlending has had a lot of traction overseas in developing nations, and most are non-profit ventures. Money is lent to people who need it to start a small business in their area. Would-be entrepreneurs can get the cash they need to fill a vital need in the community, and lenders can contribute in their own way to helping individuals find their niche and lead more productive lives.

Learn how to start your own Microlending Company and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services .

Microlending Company Image

Start a microlending company by following these 10 steps:

  • Plan your Microlending Company
  • Form your Microlending Company into a Legal Entity
  • Register your Microlending Company for Taxes
  • Open a Business Bank Account & Credit Card
  • Set up Accounting for your Microlending Company
  • Get the Necessary Permits & Licenses for your Microlending Company
  • Get Microlending Company Insurance
  • Define your Microlending Company Brand
  • Create your Microlending Company Website
  • Set up your Business Phone System

We have put together this simple guide to starting your microlending company. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas .

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What will you name your business?

  • What are the startup and ongoing costs?
  • Who is your target market?

How much can you charge customers?

Luckily we have done a lot of this research for you.

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Microlending Company Name Generator

If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name , we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability .

It's very important to secure your domain name before someone else does.

Want some help naming your microlending company?

Business name generator, what are the costs involved in opening a microlending company.

Microlenders typically don’t have a lot of overhead, though you’ll likely need to hire a loan processor, a collector, and a bookkeeper. If you plan to take on all of these roles on your own at the beginning, you'll need to be extra careful. Even one mistake on your part can land you in legal hot water.

What are the ongoing expenses for a microlending company?

Overhead for a microlender is low, as you generally don’t need an office to conduct business:

  • Employee salaries
  • Advertising costs
  • General office supplies
  • Website costs

Who is the target market?

If you're hoping to make a social contribution as much as an economic one, an ideal person to lend a small sum of money to may be a woman in a third-world country, for example. She may be smart and capable of running a small family farm, but she lacks the resources to get started. A small sum of money may buy her enough for a few animals, which she can then raise to provide for her family. She may use the milk from goats or eggs from chickens to both nourish her family and sell to others in her community.

If you're hoping to make money on your loan, you may want to consider lending to young go-getters who lack the credit history they need to get a conventional loan. There are a number of reasons why people may need a small amount of money, so do your research first before you decide which areas need your assistance the most.

How does a microlending company make money?

Microlenders make money by charging people interest on their loans. You may lend out $500 at a 20% interest rate, meaning the debtor will owe $600 by the time all is said and done.

Interest rates vary widely from place to place. Some may charge 10% while others charge up to 80%. The average is about 35%, but you’ll want to do research on the interest rates in any given area. Some well-known non-profit microlending websites don't even offer the option of interest, while others may go as low as 3%. In these cases, it's more like charity than a business venture though. Those who charge extremely high interest rates are usually for-profit businesses.

How much profit can a microlending company make?

With persistence and patience, a microlender can make a considerable amount of money when in the right area. Some studies state that up to 97% of low-income borrowers pay back their loan under the agreed-upon terms. If you make $100 on average on each loan, you’ll need to make 600 loans in a year to make $60,000.

How can you make your business more profitable?

You may wish to expand to other parts of the world to make your business more profitable. Or you could consider opening up a payday loan store in your neighborhood if you feel you have a good handle on microlending and want to serve others who may need financial assistance.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your microlending company is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil .

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

  • Separate personal and business expenses by putting your business' expenses all in one place.
  • Build your company's credit history , which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a microlending business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits .

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses .

Certificate of Occupancy

Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws, and government regulations have been met.

  • If you plan to lease a microlending office location :
  • It is generally the landlord’s responsibility to obtain a CO.
  • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a microlending business.
  • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a microlending office location :
  • You will be responsible for obtaining a valid CO from a local government authority.
  • Review all building codes and zoning requirements for your business’ location to ensure your microlending business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

FInd out what types of insurance your Microlending Company needs and how much it will cost you by reading our guide Business Insurance for Microlending Company.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator . Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a microlending company

The best way to promote and market your business is to understand the need you’re filling in any given area. For example, if you’re only targeting small family farmers, then you need to determine how they learn about financial opportunities in their area. This may include physical advertising, such as flyers, or online advertising on specific websites. Depending on your goals, it may even include going door to door.

You should also have your own website that describes what you do, and how you do it. Consider having your information in several languages for the best results, and hiring an interpreter for better communication.

How to keep customers coming back

The best way to generate customers is to be as fair a lender as possible. This doesn’t mean letting people get away with constantly missing payments, but it does mean trying to work with your clients whenever possible. Always do what you say you're going to do, and ensure excellent customer service and professional behavior at all times.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business .

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .

Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

TRUiC's Startup Podcast

Welcome to the Startup Savant podcast , where we interview real startup founders at every stage of the entrepreneurial journey, from launch to scale.

Is this Business Right For You?

This business is excellent for those who understand the power of responsible lending. This isn't charity, but it is giving someone else a helping hand when they need it the most. The successful microlender will need an excellent balance between helping others and remaining financially solvent.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a microlending company?

Microlenders must do a number of things to prepare to lend money:

  • Research target client/demographic
  • Screen clients
  • Create reasonable billing plans for pay back
  • Comply with all state/federal laws for financial lending
  • Study lending practices in different areas.

What are some skills and experiences that will help you build a successful microlending company?

Having some type of formal education in how finances work around the world will help, as will an in-depth knowledge of current law for both the country you operate out of and the country of those you’ll be lending to.

What is the growth potential for a microlending company?

Microlending has done well in Latin American countries and third-world nations because there are a limited amount of ways to obtain conventional funding. If you wish to open a for-profit business, you may want to concentrate on these areas as opposed to lending within the US.

TRUiC's YouTube Channel

For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.

Take the Next Step

Find a business mentor.

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a microlending company?

The best thing you can do is learn how to screen your clients, and to create detailed contracts about each loan. You will get a lot of applications from hard-working, responsible people who will do everything possible to use the funds wisely and pay you back. However, you will get a certain amount of people who are out to take your money, or who are asking for the money to achieve an unattainable goal. Consider video chat or in-person meetings as a way of getting to know your clients. Ask them about their business plan, and look to see how much effort went into their model.

You also need to keep meticulous records to ensure you’re never in danger of violating the laws. Start with sketching out a business plan that details how each transaction will work, and how everything will be recorded. Owners also need to have enough capital to start the business. Even with a limited amount of clients at the beginning, all of your loans will add up quickly.

How and when to build a team

Those familiar with the microlending business say to hire people right away because the risks of making a mistake can be high. However, if you’re starting small with just a few clients or you don’t have very much capital, you may be able to get everything started without external help.

Useful Links

Industry opportunities.

  • A Brief History of Microlending

Real World Examples

  • American Microloan
  • Microfinance

Have a Question? Leave a Comment!

Financial Services Business Plan

Ready to start your own financial services business? Set yourself up for success by creating a solid business plan. Download this business plan template, with pre-filled examples, to inspire your own plan.

Download a free financial services business plan template in PDF or Word doc format

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What you'll get with this template:

  • A complete business plan Unlike other blank templates, our business plan examples are complete business plans with all of the text and financial forecasts already filled out. Edit the text to make the plan your own and save hundreds of hours.
  • A professional business plan template All 550 of our business plans are in the SBA-approved format that's proven to raise money from lenders and investors.
  • Instructions and help at every step Get help with clear, simple instructions for each section of the business plan. No business experience necessary.
  • A Word doc you can edit We don't just have PDF documents that make editing a challenge. Each plan is available in Word format so you can start editing your business plan example right away.

Key sections in this financial services business plan:

All of our sample business plans are complete and include all of the sections that bankers and investors expect to see. Every plan includes the following sections:

  • Executive Summary : A quick overview of your plan and entices investors to read more of your plan.
  • Company : Describes the ownership and history of your business.
  • Products and Services : Reviews what you sell and what you're offering your customers.
  • Market Analysis : Describes your customers and the size of your target market.
  • Strategy and Implementation : Provides the details of how you plan on building the business.
  • Management Team : An overview of the people behind the business and why they're the right team to make the business a success.
  • Financial Plan : A complete set of forecasts including a Profit and Loss Statement, Cash Flow Statement, and Balance Sheet.

If you're interested in learning how to write a business plan, read our free in-depth guide to writing a business plan , download our free Business Plan Template , and check out LivePlan —our award-winning business planning software.

Looking for a sample business plan PDF? You can download a few PDF examples below:

  • Accounting and Bookkeeping Sample Business Plan PDF
  • Agriculture Farm Sample Business Plan PDF
  • Cleaning Service Sample Business Plan PDF

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money lending business plan doc

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Table of Contents

5 steps to create a loan business plan, 5+ loan business plan templates, 1. auto loan business plan template, 2. loan officer business plan template, 3. restaurant business plan to get a loan template, 4. micro loan business plan template, 5. sample loan business plan template, plan templates, 4+ loan business plan templates in google docs | word | pages | pdf.

For the development and improvement of any business, be it a small business or a large one, it needs some amount of fundings or loan. To apply for these business loans, you need a set of documents that you can use to sell yourself or your business in the eyes of the lender. Such plans should be simple but exhaustive enough to document the details of a particular company. Create a loan business plan by utilizing some of our plan templates which should help you create an image of the company.

money lending business plan doc

Step 1: Provide an Outline of the Plan

Step 2: process of execution, step 3: give details of your financial plan, step 4: give an executive summary, step 5: proofread.

auto loan business plan

  • Google Docs

loan officer business plan template

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Money Lending Business

Back to All Business Ideas

How to Start a Money Lending Business

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on June 15, 2022 Updated on November 29, 2023

How to Start a Money Lending Business

Investment range

$8,550 - $18,100

Revenue potential

$72,000 - $300,000 p.a.

Time to build

3 – 6 months

Profit potential

$58,000 - $120,000 p.a.

Industry trend

“Neither a borrower nor a lender be,” Shakespeare warned. Yet many have ignored his advice and today non-bank loans represent a $7 billion US industry. You could make good money with your own money lending business, as you’ll charge a higher interest rate and fees than those charged by banks because of the additional risk involved.

But before you start searching for investors, you’ll need to understand the process of launching a business. Luckily, this step-by-step guide has all the information you need to put you on the road to entrepreneurial success as a lender. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Before we get into the details, it’s important to clarify the type of business under discussion. Money lending businesses provide capital to individuals, generally those who cannot qualify for traditional bank loans. Money lending businesses can be structured in a number of ways:

  • Private Lending – With a private lending company, you’d be lending your own personal funds to individuals, either unsecured or secured by collateral.
  • Hard Money Lending – You would form relationships with money brokers and investors who would put up capital for you to use to make loans. The brokers or investors will take the interest earned and you would charge borrowers a loan fee.
  • P2P Lending – Peer-to-peer lending is usually online and is basically a money lending app that connects individual lenders and borrowers. The P2P lending company usually takes a fee for the loan service. 

This article will focus mainly on a hard money lending business, which requires much less capital to start. Even so, starting a money lending business has pros and cons to consider before deciding if it’s right for you. 

  • Good Money – Make 3-5% of each loan up front
  • Flexibility – Run your business from home
  • Large Market – Customers can be anywhere
  • Build Relationships – Takes time to find investors, clients
  • Attorney Fees – Need a prospectus for investors, plus loan documents

Money lending industry trends

Industry size and growth.

  • Industry size and past growth – The US installment loan industry was worth $6.7 billion in 2021 after declining 1.3% annually over the previous five years.(( https://www.ibisworld.com/united-states/market-research-reports/installment-lenders-industry/ ))
  • Growth forecast – The US installment loan industry is projected to continue to modestly decline over the next five years. 
  • Number of businesses – In 2021, 19,551 installment loan businesses were operating in the US. 
  • Number of people employed – In 2021, the US installment loan industry employed 106,935 people. 

money lending industry size and growth

Trends and challenges

Trends in the money lending industry include:

  • Hard money loans are growing in size and more often used for home purchases. This means higher fees for hard money lenders.
  • More and more cross-border hard money loans are being made due to investors wanting to expand their reach globally.

Challenges in the money lending industry include:

  • Money lenders have come under much scrutiny for alleged predatory lending practices and the high rates and fees they charge.
  • Regulations are continuously tightening on money lenders, creating obstacles to doing business.

money lending Trends and Challenges

Demand hotspots

  • Most popular states – The most popular states for lenders are South Dakota, Minnesota, and Michigan.(( https://www.zippia.com/lender-jobs/best-states/ ))
  • Least popular states – The least popular states for lenders are Indiana, Tennessee, and Virginia.

money lending demand hotspot

What kind of people work in money lending?

  • Gender – 50.8% of lenders are female, while 49.2% are male . (( https://www.zippia.com/lender-jobs/demographics/ ))
  • Average level of education – The average lender has a bachelor’s degree.
  • Average age – The average lender in the US is 44.9 years old.

money lending business demographics

How much does it cost to start a money lending business?

If you decide to start a hard money lending business, your startup costs will range from $8,000 to $18,000. The largest cost will be attorney fees. You will need a prospectus to give to potential investors detailing how you will do business and how they will get a return on their investments. Such documents are complicated and costly. You’ll also need a website and a marketing budget.

How much can you earn from a money lending business?

Hard money lenders typically take a 3% to 5% fee of the total loan amount. Since a large portion of the loans you make will be for homes, these calculations will assume an average loan amount of $150,000, which would give you an average fee of $6,000 per loan. 

The interest paid on the loans will go to the investors. Your profit margin should be high, at around 80%. In your first year or two, you could do 12 loans a year, bringing in $72,000 in annual revenue. This would mean $57,600 in profit, assuming that 80% margin. 

As you build a reputation, you could increase that number to 50 loans a year. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 40%. With annual revenue of $300,000, you’d make a handsome profit of $120,000.

money lending business earnings forecast

What barriers to entry are there?

The only barrier to entry for a money lending business is building relationships with investors, which often takes a lot of networking and leg work.

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Step 2: hone your idea.

Now that you know what’s involved in starting a money lending business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research money lending businesses in your area to examine their products and services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a micro lending company or a money lender that will provide a business line of credit. 

money lending business plan doc

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as term loans for those with bad credit, or hard money startup loans.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You’ll need to determine what types of loans to offer, and how you will evaluate credit scores to determine whether to make the loans. You’ll need to lay out specific lending criteria in your investor prospectus. 

As far as the types of loans, you can offer mortgage loans, business loans, personal unsecured loans, car loans, or lines of credit. 

How much should you charge for money lending?

Hard money lenders typically take a 3% to 5% fee of the total loan amount. The interest paid on the loans will go to the investors. The interest rates you charge will depend on the interest rate limits in your state. Working alone, your profit margin should be high, at around 80%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will generally be anyone with bad credit who needs a loan. You should market on TikTok, Instagram, Facebook, and even LinkedIn, which is also a good way to connect with potential investors. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed

money lending business idea rating

Step 3: Brainstorm a Money Lending Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “money lending” or “hard money loans”, boosts SEO
  • Name should allow for expansion, for ex: “Instant Money Solutions” over “Home Sweet Loan”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Money Lending Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: A brief summary of the business plan, highlighting its key points and objectives.
  • Business Overview: An overview of the money lending business, including its mission, vision, and legal structure.
  • Product and Services: Details about the types of loans or financial services offered, including terms, interest rates, and eligibility criteria.
  • Market Analysis: An examination of the target market, including size, demographics, and trends, to identify potential customers.
  • Competitive Analysis: Evaluation of competitors in the lending industry, assessing their strengths and weaknesses.
  • Sales and Marketing: Strategies for attracting and retaining customers, including advertising and promotional efforts.
  • Management Team: Introduction to the individuals leading the business, highlighting their qualifications and roles.
  • Operations Plan: Information on day-to-day operations, such as loan application processing, risk management, and customer support.
  • Financial Plan: Projections for revenue, expenses, and profitability, as well as funding requirements and financial forecasts.
  • Appendix: Supporting documents, such as legal agreements, market research data, or additional information to enhance the plan’s credibility.

what to include in a business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to money lenders.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your money lending business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

types of business structures

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2023

money lending business plan doc

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

money lending business plan doc

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
  • Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a money lending business. You might also try crowdfunding if you have an innovative concept. 

money lending business plan doc

Step 8: Apply for Money Lending Business Licenses and Permits

Starting a money lending business requires obtaining a number of licenses and permits from local, state, and federal governments.

You’ll need to meet the requirements to be a licensed money lender in your state. You’ll also need to follow federal and state regulations on lending practices. 

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your money lending business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

types of business insurance

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as  HES , Black Knight , or Moneylender , to manage your loan processes, accounts, credit checks, and fees. 

  • Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Starting a money lending business can be lucrative, but success hinges on effective marketing strategies. Here are practical tips beyond creating a website and networking:

  • Targeted Local Advertising: Utilize local newspapers, community bulletin boards, and radio stations to advertise your services, ensuring your message reaches the right audience within your community.
  • Strategic Partnerships: Forge partnerships with local businesses like real estate agencies or car dealerships, creating a referral system where they recommend your lending services to their clients.
  • Educational Seminars: Host free financial literacy seminars in your community to position yourself as an expert and attract potential borrowers seeking valuable insights into managing their finances.
  • Social Media Engagement: Leverage social media platforms to engage with your audience, share financial tips, and create a community around your brand, fostering trust and credibility.
  • Customer Testimonials: Showcase satisfied clients through testimonials in your marketing materials, emphasizing success stories and building credibility among potential borrowers.
  • Loyalty Programs: Implement a loyalty program offering incentives or discounted rates for repeat borrowers, encouraging customer retention and word-of-mouth referrals.
  • Direct Mail Campaigns: Design targeted direct mail campaigns to reach specific demographics, using compelling offers or promotions to capture the attention of potential borrowers.
  • Online Reviews and Ratings: Encourage satisfied customers to leave positive reviews on online platforms, enhancing your online reputation and influencing potential borrowers in their decision-making process.
  • Community Involvement: Actively participate in local events and sponsor community initiatives to increase your brand visibility and foster a positive image within the community.
  • Referral Programs: Develop a referral program where existing customers are rewarded for referring new borrowers, creating a network of advocates who vouch for your services.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your money lending business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your money lending business could be:

  • Bad credit? We can put you back in the black 
  • Mortgage loan denied? We’ll finance your new home 
  • Affordable loans to build your business

unique selling proposition

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a money lending business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in money lending for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in money lending businesses. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a money lending business include:

  • Loan Processors – handle loan paperwork
  • Loan Originators – take loan applications, get loan informational documents
  • General Manager – scheduling, accounting
  • Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Money Lending Business – Start Making Money!

Money lenders provide a valuable service to people unable to obtain loans, which is why it’s big business. If you can build solid relationships with investors and are committed to helping people, you could build a lucrative lending operation, even starting from your own home! 

Now that you know what’s involved from a business perspective, it’s time to launch your successful money lending business. 

  • Money Lending Business FAQs

You can make a 3% to 5% fee on each loan amount, so it can be very profitable. The key is to build relationships with investors who will fund your loans.

Hard money lenders typically take a 3% to 5% fee of the total loan amount. The interest paid on the loans will go to the investors. The interest rates you charge will depend on the interest rate limits in your state.

To differentiate your money lending business, focus on providing competitive interest rates, flexible repayment terms, exceptional customer service, quick loan processing, transparency in fees and charges, and personalized financial solutions tailored to individual borrower needs.

Yes, you can start a money lending business on the side, but it requires careful consideration of legal and regulatory requirements, managing risk effectively, and ensuring proper time management and resources to handle both your main job and the lending business.

Assess the creditworthiness of potential borrowers by conducting thorough credit checks, verifying their income and employment stability, reviewing their credit history and repayment patterns, and considering any collateral or guarantors provided. Additionally, evaluate their debt-to-income ratio and analyze their financial statements to gauge their ability to repay the loan.

Expand your money lending business by developing strategic partnerships with local businesses or professionals, leveraging digital marketing strategies to reach a wider audience, offering referral incentives to existing clients, exploring new geographical regions or markets, providing online loan application and processing options, and continuously enhancing your reputation through positive customer reviews and testimonials.

money lending business plan doc

This was a good guide for me , Thank you

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  • Decide if the Business Is Right for You
  • Hone Your Idea
  • Brainstorm a Money Lending Business Name
  • Create a Money Lending Business Plan
  • Register Your Business
  • Register for Taxes
  • Fund your Business
  • Apply for Money Lending Business Licenses and Permits
  • Open a Business Bank Account
  • Get Business Insurance
  • Prepare to Launch
  • Build Your Team
  • Run a Money Lending Business - Start Making Money!

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ProfitableVenture

How to Start a Micro Money Lending Business

By: Author Tony Martins Ajaero

Home » Business ideas » Financial Service Industry » Lending & Loan Brokerage Business

Do you want to start a micro money lending company? If YES, here is a complete guide to starting a micro lending business with NO money and NO experience plus a   sample micro lending business plan template. 

If you live in the united states of America, you will agree that loads of entrepreneurs are making money from offering small loans to individuals who cannot access loans from banks.

It maybe for workers whose paychecks might not be enough for them to meet their expenditure for the month; or for people who need quick loans to fix some pressing needs or projects without going through the rigors they are likely going to be subjected to by their banks or other financial institutions.

Starting a micro money lending business can be demanding and risky at the same time, but if you have done your due diligence before venturing into the business, you are likely not going to run at a loss. First and foremost, you are expected to have experience in the financial industry. It will pay you to study accountancy or banking and finance if indeed you want to venture into this line of business.

It is very needful that you analyze the existing micro money lending business in and outside of your area. Know how many they are. Also, you would be required to check the existing competition, as well as know their strength and weaknesses.

Knowing the weaknesses of the existing micro money lending businesses around you means that you would be able to learn from their mistakes and in turn come up with a better and more preferred micro money lending services devoid of the mistakes and weaknesses of others.

So, if you have done the required feasibility studies and market research, then you might want to venture into this business. If you have been tinkering with starting your own micro money lending business, but do not know how to go about it, then you should consider going through this article; it will surely give you the needed guide and direction.

Steps to Starting a Micro Money Lending Business

1. understand the industry.

The financial services industry is indeed a broad industry. An aspiring entrepreneur who has little start-up capital and a good grasp of how the financial business works can successfully start a micro money lending business.

Micro money lending (Microcredit or Microloans as it is also called) are small loans that are given by individuals rather than banks or other related financial institutions. These loans can be given by a single person or gathered across a number of persons who each contribute a portion of the total amount.

The micro money lending business is a business that is part of the microfinance industry. Micro money lenders basically give out loans of $50,000 or less to start-ups and other small scale businesses or individuals. More often than not, micro loans are given to people in Third World countries where traditional financing is not available, to help them start small businesses.

Micro lenders receive interest on their loans and repayment of principal once the loan has matured. Due to the fact that the credit status of these borrowers may be quite low and the risk of default high, micro loans command above the average market interest rate making them attractive for investors to come in.

Statistics shows that as at 2009 an estimated 74 million men and women held microloans that amounted to US$38 billion. Grameen Bank reports that repayment success rates are between 95 and 98 percent.

The Micro Money Lending cum Micro Finance industry is indeed a thriving and profitable industry especially in third world countries like Bangladesh (where it originated from), Botswana, south africa, Kenya, Uganda, India and a host of other countries.

Some of the factors that encourage entrepreneurs to start their own micro money lending businesses are that the business is highly profitable and also the fact that micro money lending has been facilitated by the rise of the internet and the worldwide interconnectivity that it brings. Individuals who wish to put their savings to use by lending and those who seek to borrow can find each other online and then legally carry out a transaction.

Over and above, starting a micro money lending business requires professionalism and good grasp of how the lending business works. Besides, you would need to get the required certifications and license and also meet the standard capitalization for such business before you are allowed to start a micro money lending business or microfinance business in the United States. The industry is heavily regulated to guide against fraud and criminality.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who require micro loans cum services of micro money lending companies cut across people and start-ups who need quick loans but don’t have the requirements to access these loans from banks and other standard financial lending institutions.

So, if you are looking towards defining the demographics for your micro money lending business, then you should make it all encompassing. It should include start-ups, aspiring entrepreneurs, and workers within and outside the United States

3. Decide What Niche to Concentrate On

There are no niche areas within the micro money lending line of business; micro money lenders basically give out loans of $50,000 or less to startups and other small-scale businesses or individuals. Some micro money lending companies also operate on the internet; that is, people can access their micro loans without physically residing within the locations where the micro money lending business is located.

The Level of Competition in the Industry

The level of competition in the micro money lending industry does not in any way depend on the location of the business since most micro money lending ventures can operate online and from any part of the world and still effectively compete in the micro money lending industry.

But over and above, there are several micro money lending ventures and micro finance banks scattered all around the United States and in the cyber space. So, if you choose to start your own micro money lending business in the United States, you will definitely meet stiffer competition not only amongst micro money lending ventures in the United States, but also all over the globe especially if you choose to also operate online.

Besides, there are well – established micro money lending firms that determine the trends in the industry and you should be ready to compete with them for clients.

4. Know the Major Competitors in the Industry

In every industry, there are always brands who perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long while and so are known for that, while others are best known for how they treat their patients.

These are some of the leading micro money lending services firms/brands in the United States of America and also in the globe;

  • Grameen America
  • Opportunity Fund
  • Accion New Mexico
  • Justine Petersen
  • CDC Small Business Finance Corp.
  • Valley Economic Development Corp.
  • Empire State Certified Development Corp.
  • Main Street Launch
  • Pacific Community Ventures
  • Excelsior Growth Fund
  • Funding Circle
  • CircleBack Lending
  • Lending Club
  • Prosper Marketplace, Inc

Economic Analysis

When it comes to starting a business like a micro money lending services firm, you just have to get your feasibility studies and market research right before venturing into the business. It is good to mention that micro money lending services business is not for rookies; it is for professionals who have successfully gathered the required experience and expertise to handle such business.

But an aspiring entrepreneur can learn on the job/business. You just have to be careful so that you don’t get swindled. Starting this kind of business definitely entails that you raise plenty of start-up capital (pool cash from interested investors).

If you are already a wealthy person, this might not be an issue. Conversely, if you cannot, you may want to consider pulling resources from family and friends. Depending on the scale at which you want to start from, you might require as much as multiple thousands of dollars to strike this off.

You will be expected to hire experts that will help you with comprehensive economic and cost analysis and the profitability of the businesses within the location that you intend launching the business. If you get your economic and cost analysis right before launching the business, you may not have to stay long before you break even.

5. Decide Whether to Buy a Franchise or Start from Scratch

When it comes to starting a business of this nature, it will pay you to buy the franchise of a successful micro money lending services firm/brand as against starting from the scratch. Even though it is relatively expensive buying the franchise of a micro money lending services firm, but it will definitely pay you in the long run.

But if you truly want to build your own brand after you must have proved your worth in the financial services industry and other related financial consulting businesses, then you might just want to start your own micro money lending business from the scratch.

The truth is that it will pay you in the long run to start your micro money lending services firm from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.

Please note that most of the big and successful micro money lending ventures around started from the scratch and they were able to build a solid business brand.

It takes dedication, hard work and determination to achieve business success and of course you can build your own micro money lending firm brand to become a successful brand with corporate and individual clients from all across the length and breadth of the United States of America and other countries of the world if you choose to operate online.

6. Know the Possible Threats and Challenges You Will Face

If you decide to start your own micro money lending services firm today, one of the major challenges you are likely going to face is the presence of well – established micro money lending services firms and also other related financial lending institutions (banks, mortgage banks, and payday loan services firms et al) who are offering the same services that you intend offering. The only way to avoid this challenge is to create your own market.

Some other threats that you are likely going to face as a micro money lending services firm operating in the United States are unfavorable government policies, the arrival of a competitor within your location of operation and global economic downturn. There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

When considering starting a micro money lending services business, the legal entity you choose will go a long way to determine how big the business can grow; some micro money lending services firms design their business and services for regional/community market, some for national market, while others for international market via online platform.

Generally, you have the option of either choosing a general partnership, or limited liability Company which is commonly called an LLC for a business such as a micro money lending firm. Ordinarily, a general partnership should have been the ideal business structure for a small – scale micro money lending services firm especially if you are just starting out with a moderate start-up capital.

But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to grow the business and have clients both corporate and individual from all across the United States of America and other countries of the world, then choosing general partnership is not an option for you. Limited Liability Company, LLC will cut it for you.

For example, Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need board of directors, shareholders meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your micro money lending services firm; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.

If you take your time to critically study the various legal entities to use for your micro money lending services firm, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your micro money lending services firm so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.

8. Choose a Catchy Business Name from the ideas Below

Generally, when it comes to choosing a name for a business , it is expected that you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents.

Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business. If you are considering starting your own micro money lending services firm, here are some catchy names that you can choose from;

  • Best Deal Micro Lending House, LLC
  • Crestal Boom Micro Money Lending Services, Inc.
  • Bernard Campari Securities, LLC
  • Micro Lending Solutions, Inc.
  • Lego Nick money lending services, LLC
  • Fleming Hills micro money Dealing Services Group
  • James Capstone micro money lending services, LLC
  • Phil Garry Securities Ltd.
  • Platform lending services, Inc.
  • DMX Lenders, Inc.
  • Shannon Stevens Lending House, Inc.
  • LMDS Financial Aid services, Inc.

9. Discuss With an Agent to Know the Best Insurance Policies for You

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your micro money lending services firm.

Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own micro money lending services firm in the United States of America;

  • General insurance
  • Risk Insurance
  • Credit insurance
  • Deposit insurance
  • Financial reinsurance
  • Lenders mortgage insurance
  • Health insurance
  • Liability insurance
  • Workers Compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance
  • Payment protection insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your own micro money lending services firm, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subject to the review of attorneys as required by USPTO.

11. Get the Necessary Professional Certification

Aside from the results you produce as it relates to return on investment (ROI), professional certification is one of the main reasons why most micro money lending services firm and financial consultants stand out. If you want to make an impact in the micro money lending services industry, you should work towards acquiring all the needed certifications in your area of specialization.

You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business. These are some of the certifications you can work towards achieving if you want to run your own micro money lending services firm;

  • Micro-Lending License
  • Certificate in Microfinance

Please note that the higher your qualifications and experience (expertise), the easier it is for you to secure high profile money lending deals from corporate clients.

12. Get the Necessary Legal Documents You Need to Operate

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized especially a business like micro money lending. It is a fact that you cannot successfully run any business in the United States without the proper documentation. If you do, it won’t be too long before the long arm of the law catches up with you.

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own micro money lending services firm in the United States of America;

  • Certificate of Incorporation
  • Business License and Certification
  • Business Plan
  • Non – disclosure Agreement
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Consulting contract documents
  • Online Terms of Use
  • Online Privacy Policy Document
  • Apostille (for those who intend operating beyond the United States of America)
  • Company Bylaws
  • Memorandum of Understanding (MoU)

13. Raise the Needed Startup Capital

Aside from the required capitalization and pool – funds to invest with, starting micro money lending services firm can be cost effective. Securing a standard office in a good business district, equipping the office and paying your employees are part of what will consume a large chunk of your start-up capital.

No doubt when it comes to financing a business, one of the first things and perhaps the major factor that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for start-up capital for your micro money lending services firm;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell of shares to interested investors
  • Applying for loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
  • Source for soft loans from your family members and your friends.

14. Choose a Suitable Location for your Business

Micro money lending services firms and most financial services based type of businesses require that you see physically with your clients hence it must be located in a good location; a location that is prone to both human and vehicular traffic and a location that is at the epicenter of a business district, if indeed you want to attend to loads of clients and maximize profit from the business.

The fact that you can operate your micro money lending services firm from any part of the world does not mean that location has little influence in the success of the business.

If you have taken your time to study the micro money lending services firm cum financial consulting industry, you will realize that those firms are willing to pay expensive rents in order to stay in a busy business district; a place where business activities and financial activities are at its peak.

15. Hire Employees for your Technical and Manpower Needs

On the average, there are no special technology or equipment needed to run this type of business except for customized micro money lending services software and social media management software applications and other financial related software apps.

So also, you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves). When it comes to choosing between renting and leasing an office space, the size of the micro money lending services firm you want to build, and your entire budget for the business should influence your choice.

If you have enough capital to run a standard micro money lending services firm, then you should consider the option of leasing a facility for your office; when you lease, you will be able to work with long term planning, structuring and expansion.

As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision.

Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Funds Manager/Portfolio Manager, Risk Manager, Chief Financial Officer (CFO)/Chief Accounting Officer (CAO), Business Development Executive/marketing Executive, Customer Service Officer or Front Desk Officer, and Accountant.

Over and above, you would need a minimum of 10 to 20 key staff to effectively run a medium scale but standard micro money lending services firm. Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some high profile financial consultancy contracts/jobs especially from big corporations.

If you are just starting out you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you which is why you should make plans to partner with other financial consultants/experts that operate as freelancers.

The Service Delivery Process of the business

On the average, the way micro money lending services firms work varies from one agency to another, but ideally, a micro money lending services firm is expected to first and foremost build a robust company profile before biding for micro money lending services contracts from corporate organizations, it will give them an edge amongst their competitors.

Micro lenders operate in the same way banks do. They get people to invest with them and pay them interest, while lending out that money to people who ask for loans and charge interest on those loans.

The difference between micro lenders and banks is that banks have a ceiling on the amount of interest they can charge, which is stipulated in the Usury Act. Micro lenders can charge any interest rate they like because of an exemption in the Usury Act.

Despite the fact that micro money lending services is highly risky, it is still a profitable venture hence there is an agreement between the micro money lending services firm and the client as it relates to the commission. Most micro money lending services firms charge based on the amount of money involved and also a fix consultancy/business administrative fees.

It is important to state that a micro money lending services firm may decide to improvise or adopt any business process and structure that will guarantee them good return on investment (ROI) efficiency and flexibility; the above stated business cum services process is not cast on stone.

16. Write a Marketing Plan Packed With ideas & Strategies

As a micro money lending services firm, you would have to prove your worth over and over again before attracting business deals from clients. So, if you have plans to start your own micro money lending services firm, it will pay you to build first build a successful career in the micro money lending services industry.

People and organizations will use your services to help them handle all their financial needs if they know that they can trust you. So, when you are drafting your marketing plans and strategies for your micro money lending services firm, make sure that you create a compelling personal and company profile.

Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to the business, and the organizations you have worked for in time past. This will help boost your chances in the market place when sourcing for clients/investors.

Here are some of the platforms you can utilize to market your micro money lending services firm;

  • Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, households and international business community in the United States.
  • Advertise your business in relevant financial magazines, radio stations and TV stations (make yourself available for micro money lending services related talk shows and interactive sessions on TV and Radios).
  • List your business on local directories/yellow pages.
  • Attend international financial cum investment expos, seminars, and business fairs et al.
  • Create different packages for different category of clients in order to work with their budgets.
  • Leverage on the internet to promote your business (when you blog regularly on key issues as it relates to your business, people would consider you an expert in the field).
  • Join local chambers of commerce and industries around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks.
  • Engage the services of marketing executives and business developers to carry out direct marketing.

17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes year in and year out to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.

If your intention of starting a micro money lending services firm is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.

In promoting your brand and corporate identity, you should leverage on both print and electronic media and also the social media (the internet). As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brand, besides it is pretty much effective and wide reaching.

Another strategy is to sponsor relevant community based programs, TV and radio programs, advertise your business in relevant magazines and newspapers. Below are the platforms you can leverage on to boost your brand and to promote and advertise your business;

  • Place adverts on financial magazines and related newspapers, radio stations and TV stations.
  • Encourage the use of word of mouth publicity from your loyal customers.
  • Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Badoo, Google+ and other platforms to promote your business.
  • Ensure that you position your banners and billboards in strategic positions all around your city.
  • Distribute your fliers and handbills in target areas in and around your neighborhood.
  • Contact corporate organizations, households and international business communities et al by calling them up and informing them of your organization and the micro money lending services you offer.
  • Advertise your business in your official website and employ strategies that will help you pull traffic to the site.
  • Brand all your official cars and ensure that all your staff members and management staff wears your branded shirt or cap at regular intervals.

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  • Is a Loan Business Right for You?

Develop a Business Plan

Form a legal entity, register your business with the irs, figure out financing.

  • Get the Required Licenses & Permits

Set Up Business Accounting

Get business insurance.

  • What to Expect

The Bottom Line

  • Personal Loans

How to Start a Personal Loan Business

Before you start a moneylender business, learn more about what’s involved

money lending business plan doc

If you’re hoping to start a business , one of the most profitable is offering personal loans to others. However, getting the startup cash and investors required can be challenging.

Before you decide to start a personal loan business, it’s important to understand the ins and outs and be prepared for potential setbacks.

Key Takeaways

  • A personal loan business can be flexible and profitable.
  • You need investors to back a personal loan business, and it can be challenging to find them.
  • It’s important to prepare ahead of time with paperwork, including loan documents.
  • Federal, state, and local laws can make starting a personal loan business challenging, and you should review necessary information before moving forward.

Decide Whether a Personal Loan Business Is Right for You

Before you move forward with a personal loan business, you need to decide if it’s the right path for you. There are different potential ways to move forward with a personal loan business. Some potential options include:

  • Your own money : You lend your own money to others. You can choose to provide secured loans or unsecured loans . However, you need to have a large amount of capital to get started, since you’re using your own money to move forward. In this case, though, you keep all the interest paid on the loan and can charge what fees you wish.
  • Investor money : With this type of business, investors provide you with the funds to make loans. The investors receive the interest from the payments, and you receive compensation in the form of a loan fee charge at origination.
  • Peer-to-peer (P2P) lending : Rather than directly lending money, you provide the means to connect borrowers and lenders . You might do it through an app or website. You take a cut of the deal but aren’t putting up your own money to get started.

A personal loan business can be profitable since you have the chance to earn money upfront from origination and administration fees. Plus, depending on how you set up your business, you might be able to benefit from the interest earned on repayments .

On the other hand, though, you have to be prepared to shoulder some of the risks. If a borrower misses payments or defaults , you could lose money—especially if you’re lending out your own money.

Don’t forget to consider the market potential as well. Loans are popular, and it’s possible to find customers all over the world. Even so, the industry has slowed in recent years, and there are concerns that increased scrutiny for moneylenders could lead to more challenges for those who want to start a personal loan business.

Pros and Cons of a Personal Loan Business

Potential for good profits, including upfront cash flow from charging fees

Flexible business model that can be managed from home if you choose

Customers available from a variety of markets, since many people need loans

Regulations can differ at the federal, state, and local levels, and it’s hard to predict how you need to comply.

It can be difficult to get enough capital to start, whether you use your own money or look for investors.

Growth in the installment loan industry has been slowing in the last few years.

Make sure to carefully consider the pros and cons of a personal loan business before you get started. Realize that regulations and the need for capital can make this a challenging business, even if you have the potential to make a good profit.

Don’t forget that heavy regulation at various levels of government can regulate how you collect interest, who you can lend to, and other aspects of personal loans. Working through the different regulations can be challenging, and it’s important to remember that financial services come with a lot of red tape. In fact, it’s important to note that there’s no one-size-fits-all approach to a moneylender business. You probably won’t be able to take one business template from one place and apply it to the same loan business in another location.

Next, you need to create a business plan . Unless you’re using your own money to fund the loans you make, you’ll need investors and other backers. Most of them aren’t likely to provide you with the money you need to get started unless you have a good business plan.

Some of the main elements of a business plan include the following:

  • Executive summary : This is the overview of your business plan. It provides a way for investors and others to quickly understand the basics of your idea and how you expect to make money. It should be the last thing you write, even though it will be at the beginning of your overall plan.
  • Business summary : Describe your business in this section. It should be an overview of what you hope to accomplish with your business and your goals. Key people in your company should be recognized here, along with their skills and what they contribute to the success of your business.
  • Products : Be clear about what you’re providing and how you plan to deliver. Make sure you’re clear about the types of loans you’ll provide. This can include whether you plan to focus on microlending , traditional personal installment loans , cash advances , or some other type of loan . You can also share whether you plan to provide options such as allowing co-signers or accepting collateral .
  • Market analysis : Next, you need to provide an analysis of your target market and potential demand. You’ll need to back this up with research and have an analysis of what type of growth you can reasonably expect, in addition to potential challenges.
  • Competitive analysis : Take a look at your likely competitors in the space. You should be able to compare their strengths and weaknesses to your own and provide an overview of how your product and business will be advantageous compared to your competitors.
  • Marketing plan : Provide a marketing plan . How will you reach your target market? What channels will you use, and do you have any promotional strategies? Flesh out a plan to show how you will reach customers and convert them.
  • Operations plan : This section is all about logistics . Where will you be located? Will you have offices or operate online? Do you have special equipment or people who can be used to make this business a success?
  • Financial plan : Don’t forget to lay out the numbers. In general, you should plan to have projects for startup costs and the type of investment you’ll need. Provide profit and loss estimates, and detail your expected cash flow . You should be able to estimate three to five years.
  • Appendix : If you have any supplementary materials and documentation, it should go in this section of your business plan.

Once you have your business plan and a roadmap for the future, you need to form your legal entity. Decide whether you should be a sole proprietor or if it makes sense for you to form a limited liability company (LLC) or some other partnership . You can also form a corporation . An accountant or a business attorney can help you figure out what type of structure makes sense for you.

If you think you’ll hire others to work in the business, or if you have investors who might want to be partners, you’ll need to keep that in mind as you form a legal business entity. Depending on your state, you might need to file articles of organization and register your business with a city or state office.

You’ll need an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) as you move forward. This will be used when you file your business or partnership tax returns . You can go to the IRS website and get an EIN and register your business within a matter of minutes. It’s also possible to complete this step by mail or fax.

One of the most challenging parts of starting a personal loan business is making sure you have the financing you need. If you’re going to loan money, you need a significant amount of capital.

If you’re using investors’ funds, you’ll need to build relationships and convince others to provide you with capital to lend to others. You’ll need to have agreements in place with your backers so that they know how much they can expect, including what types of returns they’re likely to receive.

All of this can require a lot of expense as you consult with lawyers and make sure you’re in compliance with federal, state, and local regulations.

Get the Required Licenses and Permits

Next, you need to figure out what licenses you need to operate a lending business. You might need permits as well, especially if you’re occupying a building. States, counties, and cities might have their own rules. These rules will be based on whether you operate out of your home or another location. Make sure you understand the requirements before you move forward and get the appropriate paperwork filed to operate legally.

Remember, too, that you might have to get certain licenses for financial services, depending on where you operate. Taking the appropriate tests and paying for the licenses can be costly, so evaluate whether this is something you want to pursue.

Don’t forget to set up business accounting. You should have a separate system from your personal finances. You’ll need bookkeeping and payroll for employees. You also need a way to keep track of when borrowers make payments and how much of each payment should go toward the principal and how much should go toward interest. And, if you have investors, your accounting should also take into account what’s going to them.

As a moneylender, you need business insurance to protect you if too many borrowers default or something else happens. Often, you might need business insurance to protect you in the case of lawsuits as well. If you have a building, you’ll need insurance to protect your premises. Don’t forget about workers’ compensation as well. There are many different types of business insurance, and you need to make sure you’re paying for policies that fit your needs and can help protect your assets.

What to Expect When Opening a Personal Loan Business

When you open a personal loan business, you should be prepared to work long hours and be ready to market yourself and your business. It’s also important to make sure you have enough capital available to fulfill the loans you plan to make to others, as well as meet all federal, state, and local regulatory requirements.

Understand how to put processes in place when deciding whom to lend to. Check with local regulations on how to evaluate someone’s creditworthiness and the types of agreements you need to have borrowers sign. Don’t forget that some states have caps on the interest you can charge on loans, so you should know how to set annual percentage rates (APRs) (which include origination and other fees) to be compliant.

You also need to set up payment systems to collect payment (plus interest) from your borrowers. This can include online systems, mail-in, or other arrangements. If you plan to automatically deduct from accounts, you need to have the right agreements in place and get permission for auto-drafts from bank accounts. All of this needs to be done with regulation in mind and best practices for security. You must be prepared to issue account statements to each borrower, showing them how much of each payment is going to the principal and how much is going to interest.

Don’t forget to create a collections policy. You need to have an idea of how to pursue nonpayment if someone falls behind. Once again, it’s important to make sure that how you approach collections is according to federal, state, and local regulations on personal lending businesses.

You should also have insurance and investors prepared to help you manage your business finances if you have people defaulting. To reduce the chances of default, you might need to consider how you will vet borrowers, including running credit checks and deciding what minimum credit score you’ll require.

Additionally, you’ll need to have policies for handling sensitive personal finance information. You’ll likely have to collect information regarding Social Security numbers (SSNs) , bank accounts, and other sensitive matters. You’ll need a way to protect your database and have protocols in place for keeping personal data secure.

How Do I Start a Private Lending Business?

In many cases, you need access to a large amount of capital to start a private lending business. This can come from your own finances, or you might need to get money from investors. You also need to meet specific regulations in your state and get the appropriate licenses, insurance, and permits to start a lending business.

How Does a Moneylender Business Work?

In a moneylender business, a lender provides cash to a borrower. The borrower pays interest, and they might even pay origination fees and other costs. As the borrower repays the loan, more capital is available for other loans, and the lender makes a profit from the interest they receive.

How Do Loan Providers Make Money?

Loan providers usually make money by charging interest on loans. The interest charge is normally part of the repayment process, and how the lender is compensated. Loan providers might also make money from fees they charge, including origination and administrative fees.

A personal loan business can be a profitable way to earn money. It’s relatively easy to manage, as long as you have a good system for keeping track of the progress of loan repayment. However, you need access to capital and need to be prepared to go through the regulatory process. Also, many loan businesses need good legal representation to help them navigate laws and regulations, in addition to drafting loan agreements and other documents.

Before you decide to lend money to others, carefully consider your situation and whether it makes sense for you to get involved with a personal loan business.

This article represents general guidance on setting up a personal lending business. Federal, state, and local regulations affect how a personal loan business works in each location, and you should check requirements before starting a new lending business. Consider working with an attorney or other professional to navigate the extensive regulation in the financial services industry.

IBISWorld. “ Installment Lenders Industry in the U.S.—Market Research Report .”

Internal Revenue Service. “ Apply for an Employer Identification Number (EIN) Online .”

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money lending business plan doc

How to Start a Money Lending Business (Step-by-Step Guide for 2024)

Start a money lending business and platform

Would you like to learn how to start a successful money lending business? It is no longer new that alternative finance is fast becoming a norm all over the world as small businesses and individuals seek a faster way to get funds. In a report by Grandviewresearch, alternative finance was valued at USD 10.82 billion and is expected to attain a growth of 20.2% compound annual growth rate (CAGR) from 2023 to 2030.

This is an industry with huge growth and profit potential. If you are searching for a guide on how to start a money lending business step by step, search no more. In this guide, we will give you all the information you need to start your money lending business. You will also learn how to succeed in this business.

What is a Money Lending Business All About?

Table of Contents

This is the first place to start. You shouldn’t start a business that you don’t know what its primary nature is because attempting to do so will be a free ride to disaster. 

This is a form of business where a money lending company provides loans to businesses and individuals that can’t qualify for the traditional bank loans with an interest which can be simple or compound interest.

Now that you know what your intended business is about, let’s move to the next step.

Types of Money Lending Businesses and How They Work

Money lending business is broken into three types and it is important to know them before choosing the one you are going into. Below are the three types of money-lending businesses:

1. Private Lending

If you operate a private lending company you will be lending out your personal funds. This means that when there is a loss or damage, the weight will be on you alone, and equally when there is a profit they come to you.

2. Hard Money Lending

This is the opposite of a private lending company. Unlike in private lending where you run the business with your personal funds, here you work closely with investors and money brokers. 

Investors and money brokers are the ones that will provide the capital for the business. In this type of money lending company, the brokers or investors bear the loss and also they take the interest on the loans. You only make money by charging the borrowers a loan fee.

Hard money lending must be backed with a real estate property.

Peer-to-Peer Lending

As the name suggests, this is a type of lending that happens between peers. As a P2P company owner, your job is to connect lenders to borrowers while you charge a fee for each transaction.

It’s the responsibility of the peer-to-peer platform to verify the creditworthiness of the borrower before making their loan application open to the investors (lenders). From time to time, lenders browse through the platform in search of who to lend money to for a profit in return.

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Guideline on How to Start a Money Lending Business

Know your target market.

No business can survive with patronage and that is why understanding your target market is very crucial. Knowing your target market before starting your money lending business will help you understand what you are up against in terms of risk, competition, potential profit, etc.

Take your time to research the alternative finance industry to understand the business landscape, the customers, and their pains and expectations.

Choose a Business Name and Check Availability

After you have researched your target market, it is time to brainstorm a name for your business. Your business name is its identity, therefore you need to carefully choose one. 

When choosing a name for your business make sure it is short, easy to remember and pronounce, and also unique. A short, easy-to-remember and pronounce makes it easier for your brand to stick in the minds of your customers. Always check and make sure that no other business is using the name. 

An easy way to check the availability of the name is by searching it on the internet. You might as well check the internet for AI tools for business name suggestions. The one you settle with must be one that will suit your choice of domain name .

Register a Domain Name and Setup Your Website

This is not debatable or optional. Every business that has a long-term goal in this time of the internet needs an internet presence and should take it seriously. You need a place where your customers can access your services anywhere they are.

Go on Namecheap , search for your business name, and register it.  After registration, host it on HostGator and set up your website. You can hire the service of a website developer to set everything up for you.

Register Your Company

If you are in the United States of America, visit your state’s Secretary of State office or Department of Revenue to register your business. If you are in a different region visit the equivalent in the country where you are in. 

Develop Your Money Lending Business Plan

A business without a plan is one without goals and strategy. A business plan will keep you in check. It also helps your customers to understand the business. Develop a detailed plan for your money lending platform. 

Below are the key elements of a good business plan:

  • Business Overview: This is where you present the company’s vision, mission, and plans.
  • Industry Analysis: Showcase your understanding of your business industry. The trends, challenges, etc.
  • Competitive Analysis: Analyze your business competition.
  • Customer Analysis: Analyze your potential customers. 
  • Marketing Plan: Explain your marketing strategies, costs, products, and services.
  • Management Team: Introduce the management team and their roles.
  • Operations Plan: You will explain how you intend to run your daily operations of the company.
  • Financial Plan: Here you explain everything about financing the business.
  • Executive Summary: This section briefly summarizes what your business is all about in simple words so readers can easily understand.

Secure and Equip Your Physical Office for the Business

Just as an internet presence is important for businesses, having a physical office is also important. Having a physical office adds a level of credibility to your business. 

Always make sure that your office can be easily located. Do not site your business in an environment where a large number of your competitors are. This is important because you are new and not yet known.

Secure a space for your physical office where your customers can easily walk in. Furnish it with all the office supplies to make it more organized. Follow these quick tips to improve your office space on a budget .

Buy the needed equipment like chairs, computers, etc., and install the necessary software used in the money lending business. A typical example of the money lending software your business needs before you start is the loan origination system (LOS). This is a loan processing and servicing system.

Loan origination system technology helps financial institutions generate loan documentation in a way that complies with regulatory and internal requirements.

Get the Funds for Your Lending Business Ready

If you are establishing a private lending company you should have your capital ready at this point and if you are going into hard money lending, you should have your brokers and investors.

Apply for Necessary Licenses and Permits

There are a number of licenses and permits you will need to meet their requirements before starting a money lending business at both the state and federal levels. These licenses and permits vary depending on the country and state of your business.

Open a Business Bank Account and Get a Business Credit Card

Open a bank account for your money lending business

After registering your business with the appropriate bodies, it is now time to create a business bank account. 

Do your findings of the available banks and make a choice. You should make sure that the bank’s service is friendly to businesses. 

After you have chosen a bank, visit the bank and provide documents like proof of incorporation, either driver’s license or passport, and proof of address. If there are additional documents they will inform you. 

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Get Business Insurance for Your Money Lending Business

In life nothing is 100% guaranteed therefore don’t leave your business vulnerable. Getting insurance means that your business is covered if any damages occur. Some of the insurance options include:

  • General liability insurance :  This insurance is an all-in-one insurance that covers everything that can be covered in your business.
  • Auto insurance :  This type of insurance covers damages on your automobiles.
  • Commercial property insurance :  This policy takes care of damages on your commercial properties by fire or vandalization.
  • Equipment Breakdown Insurance: Takes care of repairing or replacing equipment due to mechanical issues.
  • Professional liability insurance : This policy covers your business in the situation of a client’s claims of a loss.

It’s Time to Start Your Money Lending Business

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Payday Loan Business Plan

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If you plan to start a new payday loan business, you will first need a business plan. Use our sample payday loan business plan created using Upmetrics business plan software to start writing your business plan in no time.

Before you start writing your business plan for your new payday loan business, spend as much time as you can reading through some examples of finance and other services-related business plans .

Reading sample business plans will give you a good idea of your aim. Also, it will show you the different sections that different entrepreneurs include and the language they use to write about themselves and their business plans.

We have created this sample payday loan business plan to get a good idea of what a perfect business plan should look like and what details you will need to include in your stunning business plan.

Payday Loan Business Plan Outline

This is the standard payday loan business plan outline which will cover all important sections that you should include in your business plan.

  • Business Overview
  • Product and Services
  • Vision Statement
  • Mission Statement
  • Business Structure
  • Chief Executive Officer
  • Loan and Check Cashing Consultants
  • Admin and HR Manager
  • Marketing and Sales Executive
  • Client Service Executive / Front Desk Officer
  • SWOT Analysis
  • Market Trends
  • Target Market
  • Competitive Advantage
  • Sources of Income
  • Joe’s Beauty Salon
  • No. of Clients v/s Revenue Chart
  • Payment Options
  • Publicity and Advertising Strategy
  • Revenue and Cost Drivers
  • Generating Funds / Startup Capital
  • Key Assumptions & Forecasts
  • Income Statement (5 Year projections)
  • Balance Sheet (5 Year projections)
  • Cash Flow Statement (5-Year Projections)
  • Sustainability and Expansion Strategy

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After getting started with upmetrics , you can copy this sample business plan into your business plan, modify the required information, and download your payday loan business plan pdf  and doc file . It’s the fastest and easiest way to start writing your business plan.

Download a sample payday loan business plan

Need help writing your business plan from scratch? Here you go;  download our free payday loan business plan pdf  to start.

It’s a modern business plan template specifically designed for your payday loan business. Use the example business plan as a guide for writing your own.

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About the Author

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Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Create a form in Word that users can complete or print

In Word, you can create a form that others can fill out and save or print.  To do this, you will start with baseline content in a document, potentially via a form template.  Then you can add content controls for elements such as check boxes, text boxes, date pickers, and drop-down lists. Optionally, these content controls can be linked to database information.  Following are the recommended action steps in sequence.  

Show the Developer tab

In Word, be sure you have the Developer tab displayed in the ribbon.  (See how here:  Show the developer tab .)

Open a template or a blank document on which to base the form

You can start with a template or just start from scratch with a blank document.

Start with a form template

Go to File > New .

In the  Search for online templates  field, type  Forms or the kind of form you want. Then press Enter .

In the displayed results, right-click any item, then select  Create. 

Start with a blank document 

Select Blank document .

Add content to the form

Go to the  Developer  tab Controls section where you can choose controls to add to your document or form. Hover over any icon therein to see what control type it represents. The various control types are described below. You can set properties on a control once it has been inserted.

To delete a content control, right-click it, then select Remove content control  in the pop-up menu. 

Note:  You can print a form that was created via content controls. However, the boxes around the content controls will not print.

Insert a text control

The rich text content control enables users to format text (e.g., bold, italic) and type multiple paragraphs. To limit these capabilities, use the plain text content control . 

Click or tap where you want to insert the control.

Rich text control button

To learn about setting specific properties on these controls, see Set or change properties for content controls .

Insert a picture control

A picture control is most often used for templates, but you can also add a picture control to a form.

Picture control button

Insert a building block control

Use a building block control  when you want users to choose a specific block of text. These are helpful when you need to add different boilerplate text depending on the document's specific purpose. You can create rich text content controls for each version of the boilerplate text, and then use a building block control as the container for the rich text content controls.

building block gallery control

Select Developer and content controls for the building block.

Developer tab showing content controls

Insert a combo box or a drop-down list

In a combo box, users can select from a list of choices that you provide or they can type in their own information. In a drop-down list, users can only select from the list of choices.

combo box button

Select the content control, and then select Properties .

To create a list of choices, select Add under Drop-Down List Properties .

Type a choice in Display Name , such as Yes , No , or Maybe .

Repeat this step until all of the choices are in the drop-down list.

Fill in any other properties that you want.

Note:  If you select the Contents cannot be edited check box, users won’t be able to click a choice.

Insert a date picker

Click or tap where you want to insert the date picker control.

Date picker button

Insert a check box

Click or tap where you want to insert the check box control.

Check box button

Use the legacy form controls

Legacy form controls are for compatibility with older versions of Word and consist of legacy form and Active X controls.

Click or tap where you want to insert a legacy control.

Legacy control button

Select the Legacy Form control or Active X Control that you want to include.

Set or change properties for content controls

Each content control has properties that you can set or change. For example, the Date Picker control offers options for the format you want to use to display the date.

Select the content control that you want to change.

Go to Developer > Properties .

Controls Properties  button

Change the properties that you want.

Add protection to a form

If you want to limit how much others can edit or format a form, use the Restrict Editing command:

Open the form that you want to lock or protect.

Select Developer > Restrict Editing .

Restrict editing button

After selecting restrictions, select Yes, Start Enforcing Protection .

Restrict editing panel

Advanced Tip:

If you want to protect only parts of the document, separate the document into sections and only protect the sections you want.

To do this, choose Select Sections in the Restrict Editing panel. For more info on sections, see Insert a section break .

Sections selector on Resrict sections panel

If the developer tab isn't displayed in the ribbon, see Show the Developer tab .

Open a template or use a blank document

To create a form in Word that others can fill out, start with a template or document and add content controls. Content controls include things like check boxes, text boxes, and drop-down lists. If you’re familiar with databases, these content controls can even be linked to data.

Go to File > New from Template .

New from template option

In Search, type form .

Double-click the template you want to use.

Select File > Save As , and pick a location to save the form.

In Save As , type a file name and then select Save .

Start with a blank document

Go to File > New Document .

New document option

Go to File > Save As .

Go to Developer , and then choose the controls that you want to add to the document or form. To remove a content control, select the control and press Delete. You can set Options on controls once inserted. From Options, you can add entry and exit macros to run when users interact with the controls, as well as list items for combo boxes, .

Adding content controls to your form

In the document, click or tap where you want to add a content control.

On Developer , select Text Box , Check Box , or Combo Box .

Developer tab with content controls

To set specific properties for the control, select Options , and set .

Repeat steps 1 through 3 for each control that you want to add.

Set options

Options let you set common settings, as well as control specific settings. Select a control and then select Options to set up or make changes.

Set common properties.

Select Macro to Run on lets you choose a recorded or custom macro to run on Entry or Exit from the field.

Bookmark Set a unique name or bookmark for each control.

Calculate on exit This forces Word to run or refresh any calculations, such as total price when the user exits the field.

Add Help Text Give hints or instructions for each field.

OK Saves settings and exits the panel.

Cancel Forgets changes and exits the panel.

Set specific properties for a Text box

Type Select form Regular text, Number, Date, Current Date, Current Time, or Calculation.

Default text sets optional instructional text that's displayed in the text box before the user types in the field. Set Text box enabled to allow the user to enter text into the field.

Maximum length sets the length of text that a user can enter. The default is Unlimited .

Text format can set whether text automatically formats to Uppercase , Lowercase , First capital, or Title case .

Text box enabled Lets the user enter text into a field. If there is default text, user text replaces it.

Set specific properties for a Check box .

Default Value Choose between Not checked or checked as default.

Checkbox size Set a size Exactly or Auto to change size as needed.

Check box enabled Lets the user check or clear the text box.

Set specific properties for a Combo box

Drop-down item Type in strings for the list box items. Press + or Enter to add an item to the list.

Items in drop-down list Shows your current list. Select an item and use the up or down arrows to change the order, Press - to remove a selected item.

Drop-down enabled Lets the user open the combo box and make selections.

Protect the form

Go to Developer > Protect Form .

Protect form button on the Developer tab

Note:  To unprotect the form and continue editing, select Protect Form again.

Save and close the form.

Test the form (optional)

If you want, you can test the form before you distribute it.

Protect the form.

Reopen the form, fill it out as the user would, and then save a copy.

Creating fillable forms isn’t available in Word for the web.

You can create the form with the desktop version of Word with the instructions in Create a fillable form .

When you save the document and reopen it in Word for the web, you’ll see the changes you made.

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  • February 19, 2024   •   35:50 The Booming Business of Cutting Babies’ Tongues
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The Booming Business of Cutting Babies’ Tongues

One family’s story of “tongue-tie release” surgery on their newborn..

Hosted by Sabrina Tavernise

Featuring Katie Thomas

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A Times investigation has found that dentists and lactation consultants around the country are pushing “tongue-tie releases” on new mothers struggling to breastfeed, generating huge profits while often harming patients.

Katie Thomas, an investigative health care reporter at The Times, discusses the forces driving this emerging trend in American health care and the story of one family in the middle of it.

On today’s episode

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Katie Thomas , an investigative health care reporter at The New York Times.

A woman holding a toddler sits on a bed. The bed has white sheets and pink pillows.

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Inside the booming business of cutting babies’ tongues .

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  15. How to Start a Money Lending Business in 2024

    $72,000 - $300,000 p.a. Time to build 3 - 6 months Profit potential $58,000 - $120,000 p.a. Industry trend Declining Commitment Full-time "Neither a borrower nor a lender be," Shakespeare warned. Yet many have ignored his advice and today non-bank loans represent a $7 billion US industry.

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    4.2 Designing successful loan products 51 4.2.1 Choosing a lending methodology 52 4.2.2 Designing loan products as a series of loan cycles 53 4.3 Defining loan products in Microfin 53 4.3.1 Step 1: Set average loan amounts 54 4.3.2 Step 2: Define repayment conditions 56 4.3.3 Step 3: Identify any compulsory savings 58

  18. How to Start a Micro Money Lending Business

    Starting a micro money lending business can be demanding and risky at the same time, but if you have done your due diligence before venturing into the business, you are likely not going to run at a loss. First and foremost, you are expected to have experience in the financial industry. ... If you have a good and workable business plan document ...

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  21. PDF Micro Loan Business Plan

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  22. Payday Loan Business Plan: Guide & Template (2024)

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