With the current influx of Instant loan or online money lending services, there has never been a better time to start your own money lending business in Nigeria. In fact, many of these loan services have helped thousands of Nigerians improve their lives, pay off debts, and live more comfortable lives. If you are thinking about how to start your own Money lending business in Nigeria, below are eight steps to help you get started today.
1) Do your Research Before Starting Money Lending Business
Before beginning your Starting a Money Lending Business venture, be sure you have done your homework on how to start a money lending business in Nigeria. For starters, get acquainted with all government regulations and related rules that apply directly to your type of business. In addition, research fellow money lenders and their rates so you can offer competitive rates as well. You will also want to know how much it will cost you to set up shop and if there are costs associated with running your money lending business. If there are fees involved, consider whether they are worth it for what you are getting out of them (like access to potential customers). Also, Get all your documents together, Decide on how much you want to borrow and from whom, Register as an individual or company with CAC, Complete incorporation processes and register as a company, Obtain operating license from the central bank of Nigeria.
2) How to register your money lending business in Nigeria
A money lending business is not just another place of business, like any other. There are some formal procedures that need to be followed for you to get your money lending business registered in your state. If you’re seeking information on how to set up your own money lending business, below is what you need to know.
Register your Money lending business with the Corporate commission of Nigeria (CAC), Obtain an operating license from the central bank of Nigeria,
3) Figure Out what you really can Afford
Before you even begin thinking about how to start a money lending business, it’s important that you take some time to figure out what you can afford. This will allow you to find out if your dream of becoming a Nigerian money lender is really possible. You don’t want to invest all of your savings into your new business and then find out halfway through that it’s going nowhere fast.
4) Advertise your loan business at an affordable rate
In order to attract customers, advertise your loan business or money lending business at an affordable rate. Post flyers near banks and where cash is exchanged. Word of mouth can also be an effective way of advertising your money lending business. If you have friends who could use some extra cash, consider paying them to spread word about your loan services by simply giving them free money that they can lend out and earn interest on themselves. Also, try reaching out to people through Facebook or LinkedIn groups related to financial advice. Offer your services as a lender and provide links back to your website so potential clients can learn more about how you operate.
When it comes time for people to repay their loans, make sure you’re prepared with envelopes containing your payment information so clients know exactly how much they owe when it’s time for repayment.
5) Write out the contract and stick to it
Write out what will happen if you don’t pay back your loan and then, when you do decide to enter into business with someone, sign a contract. Draw up an agreement stating how much they can borrow, how often they must repay their loan, and how late of a payment constitutes defaulting on their part. If you’re not sure how to write a contract, search the internet for websites that offer other legal documents that might be useful for your money lending business, such as non-disclosure agreements (NDA) and promissory notes. Keep in mind that some states require certain forms for these kinds of agreements, so make sure you know your state’s requirements before signing anything.
6) Create a safe place for clients to pay back their loans
In Nigeria, when starting a money lending business, you need to make sure that you have a safe place for clients to pay back their loans. In other words, you need to be able to collect your loan payments. To do so, set up an office where customers can safely make their monthly payments. For added security, get video cameras and install them at your location as well as around it. This way you’ll know if someone comes near or attempts to break into your business. Also, don’t store all of your cash on-site; instead, keep some of it in a bank account. That way if something does happen at your business you won’t lose everything. You might also want to invest in safes or vaults, which will protect any valuables from theft. If possible, hire a security guard for additional protection against theft.
7) Set up payment reminders
If you’re worried about collecting payments, you can set up automatic payment reminders that remind customers of their due dates. These tools are especially important if your clients are out of state or pay you late all of the time—you don’t want to find yourself scrambling for cash at an inconvenient time. You can also use these tools to track down debtors who have fallen behind on their payments. You could even set up a system where your clients get text messages reminding them of their upcoming bills and what they need to do to make sure they are paid on time.
If you are thinking about starting your own money lending business in Nigeria, it’s likely because there aren’t enough available options for people who need personal loans. This is where you can step in and offer your services.
Here are seven steps to getting started
Determine if you have what it takes: You might be surprised by how much time and effort goes into running a successful business. Before diving in, ask yourself if you have what it takes to see things through from start to finish. Do you have enough savings? Are you willing to spend long hours at work? Can you handle rejection from potential clients? And perhaps most importantly, do you really want to be a lender? Keep in mind that being a money lender isn’t just a job it’s also an investment of your time and energy. So before making any decisions, take some time to think about whether or not you truly enjoy lending others money.
Find out if you have what it takes: Once you’ve decided that being a lender is right for you, it’s important to get an idea of how well-suited you are for the role. There are many different types of lenders, so make sure you understand exactly what you’ll be doing on a day-to-day basis. For example, will you only lend money to friends and family members? Or will you consider lending to strangers as well? Will all of your loans be short term (with terms lasting between two weeks and six months)? Or will some of them last longer than that? Asking these questions now will help you determine which type of lender would best suit your needs.
Check state regulations: In order to legally operate as a money lender, you must first check with your state’s laws regarding small business loans. Some states require lenders to register with their Secretary of State office; other states don’t require registration but do require businesses to obtain a license from their Department of Banking or Financial Services office. It’s also wise to find out how often you’ll need to report your earnings and how much you should expect to pay in taxes.
Write up a plan: Now that you know what you’re getting into, it’s time to sit down and write up a plan for your new business. Your plan should include details like how much you intend to charge for each loan, how long each loan will last, how many total loans you intend to give out per year, and how much profit you expect to earn over a certain period of time. The more detailed your plan is, the better prepared you’ll be when it comes time to open shop.
Create a website: Building a website is one of the easiest ways to attract new customers online. That’s why you’ll want to create a professional-looking site to advertise your services. But don’t just throw together any old site you’ll want to make sure it includes information about how you plan to run your business, how you got started, and how potential customers can contact you.
Build relationships: One of the keys to success in any industry is building strong relationships with others. That means you talking with local community leaders and attending networking events whenever possible.
Get your money lending business off to a good start: When you’re ready to officially launch your business, be sure to follow proper procedures for opening a bank account and accepting payments. Then, once you’ve accepted your first few loans, it’s time to celebrate! After all, you’ve earned it.