Personal Loan Company Business Plan, Marketing Plan, How To Guide, and Funding Directory
The Personal Loan Company Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start a Personal Loan Company business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.
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Personal loan companies are popular businesses to operate within the United States given that there is a significant amount of debt that is used to finance lifestyles in this country. The gross margins that are generated from interest income are extremely high given that most personal loan companies charge anywhere from 15% to 29% interest rates depending on the state. These businesses usually have very high startup capital costs given that a significant amount of capital must be on hand in order to issue personal loans. Most individual entrepreneurs looking to enter this industry typically will have anywhere from $500,000 to $2 million of cash on hand in order to provide the initial loans to customers. Additionally, many entrepreneurs will seek to acquire a line of credit that will be secured by loans issued in the company’s name to borrowers. One of the downsides to a personal loan company is that there are a substantial number of both state and federal laws that must be adhered to at all times. These laws are frequently referred to as usury laws. As such, it is important that any entrepreneur who was looking to enter the personal loan industry have a qualified attorney on staff in order to make sure that these laws and regulations are followed precisely. Personal loan companies operate in two ways. First, many companies will operate a retail location where people can go in and apply for a loan directly. These days it is very popular for the development of a online platform that allows individuals to readily acquire credit via an online application.
Almost all personal loan companies are started with investment funds you there from the entrepreneur directly or from a group of investors. Only once a company becomes very profitable will a bank or financial institution provide the necessary capital in order to issue loans. If an entrepreneur is looking to raise capital from a private investor and they are going to need a business plan. The personal loan company business plan should include a detailed profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. Most importantly, the document should also include a detailed procedural examination of how loans will be issued. Many people will include the company’s preliminary credit manual as part of the overall package that is presented to a funding source. Beyond this information, a thorough examination of the market that is being targeted should also be discussed. If this business is going to be operated locally than an examination of the population density, population size, median household income, and number of people needing personal loans should be developed. Beyond that, a thorough analysis of the number of competitors operating within any local market should also be discussed. However, this can be somewhat light given that most people now use online platforms in order to acquire credit. As such, most of the competitive analysis should focus on larger lenders that seek to target a large number of people on an ongoing basis.
A personal loan company marketing plan and SWOT analysis should also be developed. As it relates to marketing, a substantial amount of this document should focus on online marketing given that most people now apply for credit through these channels. A presence on social media – while important – is not necessary given that most people will use popular search engines such as Google and Bing in order to find lenders that are able to provide small personal loans. As it relates to the strengths of this business, there are very high gross margins generated from interest income and loan closing fees on an ongoing basis. Additionally, these businesses are highly scalable and can be expanded simply by acquiring additional rounds capital. For weaknesses – there are a number of laws that he to be complied with on an ongoing basis in order to legally operate a personal loan company. For opportunities, these businesses can readily expand by acquiring a warehouse line of credit that allows an individual or personal loan company to issue additional loans in the businesses name. For threats, the financial industry is always undergoing significant changes as it relates to the regulations. As such, it is very important that a personal loan company have an attorney on staff that understands all state and federal usury laws and to ensure that the business is operating with the letter of the law at all times.