Things necessary to start a payday loan business include access to immediate and surplus funds, office space, and knowledge of specific rules regarding the payday loan business, according to Financial Web. It is also important to know where and how to market the business and find potential customers.
Another important aspect of starting a payday loan business is figuring out how to qualify loan applicants. Eligibility criteria for a person to receive a loan may include recent pay stubs and previous years' tax returns, advises Financial Web. Proper identification such as a driver's license or Social Security card should also be obtained along with all loan applications.
Although payday loans are generally considered dirty business by many experts, some investors in the finance industry are trying to change the way traditional payday loan businesses operate, notes Fortune magazine. The hope is that early repayment incentives and financial education courses can help customers eventually improve their overall financial situation instead of just getting them further into debt by charging exorbitant fees, says Sasha Orloff, CEO of the payday loan start-up company LendUp.
Before officially setting up the payday loan business, it is advisable to meet with a lawyer to set up detailed loan agreements, including intended interest rates, repayment schedules, late fees and what happens if the loan goes into a default status, states Financial Web.