In today’s article, we will be talking about how to start a loan business in India. India is a country in South Asia that is populous. It is also a growing technology market that is good for starting a loan business.
Starting any business requires one to have an in-depth understanding of client needs. Also one ought to have a solid plan.
Money! Everyone wants to earn an extra coin. Having an extra coin gives one freedom to conduct many other transactions that wouldn’t be possible without extra cash.
Besides, you never know when an emergency can hit. Loans have come along to help everyone in need of transacting in their day-to-day activities.
What is a loan business?
It is a two-way transaction service between two or more entities asking for funds from one lender or multiple lenders.
It involves a lender who credits and a debtor who borrows the loans. The debtor however has to agree to terms and at times assign a guarantor or collateral when borrowing huge amounts.
Is a loan business legal?
Yes, it’s the same as the loans given by the banks. An exception is that they are lending out fast and have different rates.
But the loan business has to be registered and it follows the country’s laws on lending and rates on loans.
One must also ascertain that they have the legal documentation so as not to get into trouble with the authority.
Does a loan business pay?
Yes, just like many other businesses it gains profits as part of the transactions done. The loan lenders earn from fees on interest rates and late payments.
With risks comes rewards and before diving into the business you need to have done enough research.
How to start a loan business in India
Here is what to do before starting that loan business:
1. Choose a business name
This is the most critical process, this name is responsible for market the business and creates other opportunities.
It is the name that clients will know about whenever they want to acquire your services. Have a name that stands in for the business.
2. Create a solid plan
A plan is a detailed event on how different activity is to be conducted. It is also how different resources are to be allocated on which activity.
A plan should have the following:
- Strategic plan- this is the structure in use to run operations of the business.
- Market analysis and marketing plans- understanding the working environment and making plans for reaching people through advertising.
- Financial plans- detailed information about the cash flow and overall usage of money and resources.
- Management and personnel- detailed information on different work personnel and their managers.
3. Find enough funds
Funds are necessary to help one register the business, start-up, and also to be used in lending. Money also pays for other miscellaneous occurrences.
Money apart from registration can be used to pay for systems and software to be used in running the business.
4. Visit the registrar’s office
This is the body responsible for assigning licenses and permits for the business. It also ascertains the terms and conditions of your business.
Visit the regulatory bodies where you will be directed on what to do next. The department also will ascertain if the business meets the correct business criteria.
5. Obtain the right licenses and permissions
Under Section 8 of the Companies Act, one ought to comply with its guidelines concerning Interest Rates and Processing Charges.
Make sure to have the right licenses that stand in for your business dealings. It makes the business credible.
6. Establish lending guidelines
This is the criteria to govern how the business operates. It also gives an outline of the business structure is how clients should transact.
They are in form of terms and conditions that are to govern and regulate the process of lending and payment options.
7. Establish good Business Practices
They are a set of guidelines. These guidelines are responsible for creating a general framework for a variety of situations.
Cultivating great business practices is a good way to maintain trust with your clients.
8. Get a website
A website is a good way to advertise. It is also a good way to interact with clients and post updates about the changes and implementations to be done.
Have a site that gives access to everyone who needs help and other business information fast without having to go through a lot.
9. Market your brand
There are many ways to sell your business. People are the best, for the word of mouth is reassuring than many other ways.
Having the right team will help grow the business and bring more clients.
10. Start your business.
Once implemented all these, start operations whether it is online or office-based. Welcome the first clients well because they will the first to sell your business.
Loan businesses are booming for the demand for money is high. Money has never been enough, having a way to earn extra is great.
After starting the business it comes with a lot of workloads especially of the client data management, transactions, and interest, and fines reports.
However here is great news; there is software that can help you manage all these data as well as generate reports.
So what is this software?
Introducing the Jisort system:
Jisort is a cloud-based financial solution for Banking, SACCOs, Credit Unions, and other financial institutions.
It is used to manage their clients’ information, keep track of their transactions and generate reports and business statements.
Here is also the system demo of Jisort:
The demo shows:
The number of all the clients, the completed loans, active loans, and the pending loans.
It also shows client’s transaction records and a way to export their data elsewhere whenever you want to share the details with your client.
It also a graph that shows how the expenditure has been by comparing income and expenses for a duration of three months.
Here is the system pricing:
Get these and much more by signing up here.
Take the opportunity and start the business, use Jisort to help minimize the workload. Jisort also will help track the loans and clients.
Having learned about how to start a loan business in India consider starting the business now. Make money by giving people money.