Cash advance loans give applicants instant access to money during an emergency. This is a profitable business, and it's ideal for anyone who's looking to start her own company. Although cash advance companies continually write loans, they make money on the interest paid by applicants. Before choosing to start a cash loan company, familiarize yourself with the process.
Purchase a cash advance franchise. Buying a franchise is the easiest way to start a cash advance business. Franchise owners obtain training and marketing materials, and the franchise fee generally covers advertising costs.
Research your state's cash advance laws. Cash advance laws vary by state. Call your state's business regulation office or speak with an experienced attorney. Each state determines the maximum interest rate a cash advance store can charge borrowers and the procedure for dealing with delinquent loans.
Create a business plan. Hire a business plan writer or draft your own business plan. Present your business plan to the bank when applying for a loan. Business plans describe in detail your goals and how you plan to operate your cash advance business.
Check your credit score. To obtain a loan for your business, you'll need good credit. Make a habit of paying your bills on time, and eliminate unnecessary debt. Your credit score can affect your loan amount and the interest rate.
Apply for a loan. Cash advance franchises are expensive. You'll need between $25,000 and $165,000 to get started. Approach banks, credit unions or private lenders for startup capital.
Draft a contract. This is a risky business and you'll need a contract that describes the terms of the agreement, such as the loan amount, interest rate, due date, late fees and other penalties.
Choose a location for your business. Pick a location that's visible from main highways or a location that receives a lot of foot traffic.
- Discover. "What Is a Cash Advance?" Accessed Sept. 28, 2020.
- American Express. "Table of Fees & Charges and Sample Finance Charge Computation." Accessed Sept. 28, 2020.
- Consumer Financial Protection Bureau. "Credit Card Contract Definitions." Accessed Sept. 28, 2020.
- Consumer Financial Protection Bureau. "§1026.60 Credit and Charge Card Applications and Solicitations." Accessed Sept. 28, 2020.
Valencia Higuera is a freelance writer from Chesapeake, Virginia. She has contributed content to print publications and online publications such as Sidestep.com, AOL Travel, Work.com and ABC Loan Guide. Higuera primarily works as a personal finance, travel and medical writer. She holds a Bachelor of Arts degree in English/journalism from Old Dominion University.