How do I start a cash loan business?
I have maybe 40K. Its not much to start a small business but I figure if i can loan out 1K at a time and charge an interest fee of $20 each, I can probably build it up quick. The problem is , I need to keep my borrowers in check if they won’t pay it back. How can I reenforce my payback policy?
Tags: business, cash, loan, Start
In a business such as this, there is always the risk that a person will not pay you back. This is when a thorough reference policy would be helpful, so you can track down individuals should they become missing and unwilling to pay.
You should also gain some kind of collateral, like a check- this way should they not come a pay you as scheduled you can cash their check and gain your money back. You do run the risk of insufficient fund charges, but that will usually be handled on the borrowers end or the check will be sent back and declared unpaid. But most people will want to avoid those extra fees, and pay you back.
Another option would be to offer loan extensions for a fee, this way you earn more interest on the money, until the person can actually pay the entire amount off.
You could always break legs as well, I think that sends a pretty stern message:)