MICRO MONEY LENDING BUSINESS PLAN GUIDE
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
– 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.
The Executive Summary
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.
The Market Analysis
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.