Debt Collection for Lending Businesses

The Lending Business
Every lending business needs to have some debt collection capability. This is because some of the people who borrow money will inevitably fail to repay on time. In fact, some of the people who borrow money will simply vanish, with no hope of them ever repaying their loans willingly. They therefore have to be compelled to repay. And that is where the need for debt collection capabilities comes in. There are two ways in which a lending business can deal with the debt collection challenge: The first option is where the lending business can create an in-house debt collection department. So this is where you hire folks who know how to go about the debt collection work. You can then pay them a salary or you can pay them on…
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Lending to Small Scale Traders

The Lending Business
One of the ways in which you can prosper in the lending business is by advancing loans to small scale traders. This, in more sophisticated terms, is all about lending to the small and micro enterprises (SMEs). It is true that the small scale traders are likely to have limited capacity to absorb loans individually. But collectively, they can end up borrowing much more than what you’d have lent to a few large scale businesses. And as you are likely to discover (once you start working with them), the small scale traders tend to take loan repayments very seriously. They are unlike the large scale traders, who have a detached attitude towards loan repayments: knowing that they can always seek bankruptcy protection the moment they have difficulties repaying their loans.…
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Lending People Who Have Poor Credit Ratings

The Lending Business
One of the ways in which you can improve your lending business’ earnings is by starting to lend people who have poor credit ratings. They are a huge, untapped market. True, lending people who have poor credit scores is risky. But it can also be very profitable. This is because such people, who have low credit scores, tend to have very few places they can borrow from. Because they lack options, they are often willing to bear very high interest rates. And such high interest rates potentially translate into higher profits for the people who take the risk of lending to folks with poor credit ratings. It is important to understand that a poor credit score doesn’t always translate into lack of creditworthiness. Some of the people with poor credit…
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Hiring Managers for Your Lending Business

The Lending Business
As your lending business grows, it will soon get to a point where you have to hire professional managers, to help you run it. Take, for instance, a case where your lending business expands geographically, with the opening of new branches. That would necessitate the hiring of branch managers, to help you run the new outlets. We may also be looking at a case where you have to hire line managers for your lending business. Like, for instance, if the number of staff grows beyond a certain number, you have to hire a HR manager. Or if the financial resources grow to a certain point, and you find yourself having to hire a finance manager (or financial controller). Now the success of your lending business will be greatly influenced by…
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How to Market a Lending Business

The Lending Business
If a lending business is to grow and thrive, it needs to be marketed. It is through the marketing effort that you would be able to get new customers (potential borrowers) to know about the lending business. Further, it is through the marketing effort that you would be able to retain old customers in the lending business. So one of the ultimate objectives here would be that of getting new people to take up the loans offered by the lending business. The other ultimate objective would be that of getting the people who have been taking the loans offered by the lending business to continue doing so. Some of the ways in which you can market a lending business include: Through mass media adverts: so this is where, on behalf…
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Getting a License for a Lending Business

The Lending Business
Before starting a lending business, you will need to obtain a license. You can’t establish a lending business without a license. Even if you manage to get a lending business going without a license, you would not have peace of mind. For running a lending business without a license would mean always being on the wrong side of the law. Furthermore, running a lending business without a license would mean that you would be confined to ‘underground’ operations. That would in turn limit your operations. It is therefore very important to make an effort, and get a license for your lending business. To get a license for this sort of business, you will need to: Identify the relevant licensing agencies: there are certain nations where operators of lending businesses are…
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Running a Commission-Based Lending Business

The Lending Business
One of the ways in which you can succeed in the lending business is through the use of the commission model. In today’s article, we will be trying to understand how the commission model works, within the lending business model. We will also be highlighting the steps that you need to follow, if you wish to run a commission-based lending business. How the commission model works, within the lending business To succeed in the lending business, one needs to have two basic things. Firstly, one needs to have money to lend. And secondly, one needs to have borrowers, who would borrow the money, and then repay it with interest. The interest is the profit. Now getting the money to lend isn’t too hard, as long as one is connected to…
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3 Ways in Which Lenders Assess Borrowers’ Creditworthiness

The Lending Business
One of the biggest challenges faced by lenders is that of assessing potential borrowers’ creditworthiness. Lenders need to be reassured that the potential borrowers are creditworthy, before lending them money. The main question that the lenders usually ask themselves in this regard is as to whether the borrowers are likely to repay the money, once it is lent to them. And in order to get an answer to this question, they usually look at 3 things. In other words, there are 3 main ways in which lenders go about assessing borrower’s creditworthiness, namely: By looking at the borrowers’ earnings: upon looking at a person’s earnings, it is possible to tell how much money they can afford to borrow (or, in this case, how much they can be viably lent). Thus,…
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3 Challenges You are Likely to Face in the Lending Business

The Lending Business
The lending business is not as easy as it looks. Talk to any person who is involved in the lending business, whether that happens to be a bank manager, a credit union manager or even a shylock, and they will tell you that the lending business is not as easy it as it looks. It is a very challenging business. Therefore, before getting into any sort of lending business, you need to be aware of the fact that there will be challenges. Some of the specific challenges to expect in the lending business include: Securing funds for onward lending: one option here is that of borrowing money at a low interest rate, and then lending it to other people at a higher interest rate. But you see, there is the…
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How to Succeed in the Lending Business

The Lending Business
There are certain things you need to do, if you wish to succeed in the lending business. Whether you are operating a lending business as a pawn-shop operator, a micro-finance lender, a credit union or a mainstream bank, the basic principles are all the same. So in today’s article, we will be looking at those things you need to do, in order to succeed in the lending business. And without any further ado, if you wish to succeed in the lending business, you need to: Exercise prudent lending practices: this is where, for instance, you need to subject clients to creditworthiness checks, before giving them major loans. It is also where you endeavor to only lend people money that they can comfortably repay. Maintain good relations with your clients: here,…
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