The industry of guarantor loan lenders is constantly growing, diverging and branching, with more options provided, more lenders emerging and more potential borrowers considering this way of solving their financial troubles. Classic loan models including big amounts of lent money, thoroughly evaluated borrowers and their guarantor with strict regulations and criteria are still dominantly being operated by banks and powerful institutions as the direct lenders. However, the system of payday loans is becoming quite popular and many borrowers opt for this option. Consequentially, many people consider purchasing payday loan franchise like the way to start a small business as payday lenders.
Characteristics of payday loan franchise
In some way, working as a payday loan lender is like running any other small business, but there are some specifics attached to this job. Namely, the idea of payday loan system is to provide borrowers that have low income, bad credit loans and no financially suitable guarantor with a small, but quick loan at the cost of relatively high-interest rates and fees. Considering the target group of this loan system, purchasing payday loan franchise means that you are taking up business centered around poorly evaluated clients, with a great risk of having troubles repaying and recollecting your landed money. On the other hand, quick lending cash with high-interest rates can be a quite lucrative business.
How to pick a payday loan franchise
The easiest way is to search the advertisements and monitor loan market looking for suitable payday loan business you can afford. Instead of purchasing a complete business, consider purchasing solely franchise and staying attached to the mother company. This will enable you to copy business structure, regulations, employees’ training, evaluation of the clients and many more aspects of the business. Opt for the developed and steady businesses that run for years instead of high risk newly founded payday loan companies. Analyze the company’s overall success in recollecting debts, interacting with clients, negotiation outcomes and all other aspects suggesting the quality of the company’s activity and financial stability. Carefully go through balance sheets, budgets and financial reports to see the cost-benefit within the business, but also to estimate if the franchise is affordable to you.
Consider applying for the loan yourself to gain the money for investment. There are many lenders willing to provide loans to small businesses if you submit valuable business plan and strategy of repayment. Once you’ve collected the money, check for the debts included into franchise and construct a contract that releases you from taking over previous owner’s debts. Contact the business manager or lawyer and go through negotiations carefully clarifying all details regarding your rights and obligations as the new owner.