This is a guide on how to start a loan business in South Africa.
People need loans, our economy is a debt-based economy, people are always looking for financial injections. In this guide we are going to look at how you can establish a micro lending business. Micro lending is basically lending money to people that don’t get approved for loans through other federal institutions.
Micro lenders usually lend money to would be entrepreneurs that need financing, or people that need a quick cash bailout. People that are seeking the loan don’t have to meet strict qualifications to apply for the loan.
Here is what you need to start your loan business in South Africa.
1. Operating premises
Micro lenders don’t have a lot of overhead costs, you can start this business from anywhere. Even directly from your own home, you will just have to set up a professional space where you will meet with clients.
2. Legalities
You will need to have licenses before operating, one little mistake can lend you in hot legal waters. Some of the licenses include registering your services with the National Credit Regulator. You will also need to register your business with the CIPC, this only costs R175.
You will also need to have a good lawyer on your side, it’s important to hire a lawyer to handle all the paperwork, doing this will ensure that you stay on the good side of the law. Credit is a very sensitive issue, everything should be done by the book, a lawyer will be very useful. Don’t attempt to handle all the legalities by yourself.
3. Employees
You don’t need to have any full-time employees when starting a micro lending business. All you will need is a bookkeeper and someone who works in administration at most.
4. Marketing
You will need to market your business so that more people will know about it. First things first, a website will be needed for displaying all information, information like the terms of your loan and interest rates. You can get a website for R1 200 from Promta Web Services. Other marketing techniques include running paid adverts on social media and Google.
How much should you charge for interest?
Interests rates vary from place to place, you can charge anywhere between 10% and 50%. The fair percentage to charge would be 35%, anything over than that is considerably high.
Conclusion
This was a guide on how to start a loan business in South Africa. Do you have any thoughts or questions? Comment below.
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Rasiwela Alfred
13 Mar 2021How much amount is needed in your Account in order to qualify for starting a micro loan business
Sylvia
13 Nov 2021Hi there , did you ever get the response to this? I am also very interested to find out.
Calvin
6 Apr 2021I have registered with CIPC only, what is the next step that I must take?
Sylvia
13 Nov 2021You need to apply for a National Credit Regulator also
Fakazile
26 Apr 2021How to get the resources like the machine that traces if a client runs to another bank.
Sizana
27 Apr 2021Very useful information, how much capital will need to start without fail?
Thabang
5 May 2021How much do I need to start a micro loan business
Edwin
14 May 2021How much capital is needed to start microfinancing business in s.a.
Send info
Ignatius
17 Jul 2021What’s the registration process and the start up capital for a micro loan business?
And how do I apply at NCR and at CIPC?
LN NQUBUKA
27 Jul 2021Hi, go on their website, download forms and complete them, there is an email address and a bank account number, you can also call them. I went on the NCR website and just looked for information there, I also called them. I did that last year and they are very helpful, I registered last year and now I have to pay renewal.
sibabalwe
27 Jul 2021Thank you so much for providing that helpful information 🙂
Sylvia
13 Nov 2021I want to please find out how much money would this need in total as capital? Also is there any chance of inviting any investors?, I am also just thinking of all the other formalities maybe such as credit checks etc?, can you outsource this or would it be mandatory to have your own systems in place?
Aviwe George
23 Nov 2021Good morning, I want to start a micro loan business.. What must I do? Where do I start to have papers and to make my business legal?
Alan Smith
3 Dec 2021Are you interested in getting a business or personal loan at 3% interest rate? Email us: alansmith.smith61@gmail.com
Patric
26 Dec 2021How much do I need start a micro loan business
Nomoya
3 Mar 2022How to start an online short term loan here in mzansi