How to start a loan business in South Africa

How to start a loan business in South Africa

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.

Please follow us on Telegram https://t.me/mysouthafrica for more awesome content

This Post Has 16 Comments

  1. How much amount is needed in your Account in order to qualify for starting a micro loan business

    1. Hi there , did you ever get the response to this? I am also very interested to find out.

  2. I have registered with CIPC only, what is the next step that I must take?

    1. You need to apply for a National Credit Regulator also

  3. How to get the resources like the machine that traces if a client runs to another bank.

  4. Very useful information, how much capital will need to start without fail?

  5. How much do I need to start a micro loan business

  6. How much capital is needed to start microfinancing business in s.a.
    Send info

  7. What’s the registration process and the start up capital for a micro loan business?
    And how do I apply at NCR and at CIPC?

  8. Hi, 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.

    1. Thank you so much for providing that helpful information 🙂

  9. I 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?

  10. Good 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?

  11. How much do I need start a micro loan business

  12. How to start an online short term loan here in mzansi

Leave a Reply

Close Menu