Many budding entrepreneurs have tons of profitable business ideas in their heads. But sadly, most of them don’t have enough funds to launch their dream businesses. And for this one reason, many business ideas have been abandoned for years.
However, with micro-lending institutions now springing up everywhere, the story is changing; budding entrepreneurs are now starting their dream businesses, and many new small- and medium-scale businesses are now emerging daily.
This new trend has made micro lending a very lucrative business in itself. If you are looking to start your own business, then starting a micro lending company is one of the best opportunities you can grab right now.
Why is micro lending a lucrative business?
The answer is simple: micro-lending companies offer financial aid to small businesses and emerging entrepreneurs that are not eligible for bank loans. And there is a very large market for these companies, since most new businesses, which are small businesses – turn to them for start up funds.
Why is micro lending gaining more popularity?
Micro lending is enjoying increased global acceptance because its primary motive is to create social development by empowering needy entrepreneurs and helping them become financially independent. Also, micro lending helps small business owners expand their businesses by giving them loans for this purpose. These contribute immensely to the development of the society as a whole.
How can you start a micro lending company?
Well, that is exactly what this article is all about. If you seem to be interested in the business and would like to take a plunge, the following are the steps you need to take:
Starting a Micro Lending Company – Sample Business Plan Template
A business plan includes a lot of vital information about your proposed business, such as the startup costs and projected revenue, market analysis, and so on. Just as a compass guides the sailor during a voyage, a business plan helps you steer your business towards achieving your desired goals.
A well-written, comprehensive business plan can also help you convince investors and loan-giving institutions that your business idea is very promising.
It is important that you develop your mission statement and make a list of your target customers. You will want to target budding entrepreneurs and small business owners.
Depending on what businesses are “hot” in your location, you can streamline your target to few industries at first. For example, if you live in a city or country where fishery or other agriculture-based businesses are the most lucrative, you can start by offering your credit packages to entrepreneurs in those businesses. Similarly, you can decide to target women-only businesses, such as day-care enterprises, adult care services, and so on.
While the capital required to start a micro-lending business won’t break the bank, you may need to source for funds from other sources if you cannot afford the whole startup cost.
Other sources you can approach for extra funds include friends and relatives, banks (if you have a good credit rating), government, angel investors, and so on. Depending on your state or country, the government may issue grants to entrepreneurs with promising business ideas. If something similar obtains with your state or federal government, apply for it.
4. Register your company
You will need to register your micro-lending company with the appropriate agency. You will also need to obtain all the necessary licenses and permits. And most importantly, you must fulfill legal obligations required by your state of federal government to avoid falling into problems.
5. Hire quality personnel
This is the most important step in setting up your micro-lending company. All your employees must have relevant qualification and experience in financial lending as well as small business assessment. They must know what it takes to build solid relationships with customers, and they must be willing to achieve that. They must also be able to efficiently execute the factors included in lending applications.
By effectively implementing the steps above, you will be able to set up your micro lending company without any problems.
However, remember that micro lending is not based on traditional bank lending requirements. Before giving any loan, you must ensure that the applicant has the ability to repay the loan.
Finally, you must bear in mind that this post isn’t meant to be a comprehensive guide on starting a micro lending company; it only discusses the basic steps involved in setting up the business. To set up your business, you will need more information as well as professional advice from both an experienced accountant and a solicitor.
- 1000+ Most Profitable Franchise Opportunities for Beginners - November 14, 2020
- Types of Legal Structure for Registering a Business - November 14, 2020
- How to Do Due Diligence for Assisted Living Facility On Sale - November 3, 2020