Starting a Payday Loan Business

Tips on starting a payday loan business in the United States and what are some of the best resources of information for a start up cash advance firm.

One of the first things to consider, when pondering on whether to start a payday lending store, is that there will be a lot of competition wherever you decide to start in the country (provided that cash advances are allowed in the state).

In fact, industry analysts have been making estimates that there are around 20,600 payday advance locations in the United States.

These storefronts have annually been providing short-term financial services to around 19 million households, to the volume of about $38.5 billion.

If you find an area where there is little or no competition for cash advance business the country, the most likely reason is that the state's regulation's have either outright banned payday lending, or that the fees and interest rates have been capped to a level where most payday advance businesses find it impossible to operate.

In fact, the individual states are nowadays regulating the industry very heavily, and perhaps the first thing to do, when considering entering this industry, is to study the applicable federal and state legislations, and to get legal help.

A good resource in this regard is the payday loan industry's main association in the United States, called Community Financial Services Association of America (CFSA).

Community Financial Services Association of America (CFSA)

As the cash advance industry's main association in the country, Community Financial Services Association of America (CFSA), which was founded back in 1999, provides a wide range of services to both their member companies, policy makers, and the public.

In addition to providing information about the environment under which you'll be starting a payday loan company in your state, the association is also a great resource for the
best practices in the industry.

A good place to research on how the responsible firms operate in the industry is to read the CFSA Best Practices document, available online from their official website, a great read for those starting a payday loan business.

The association also holds different types of educational and networking events, including their famous annual conference every March, Webinars, and podcasts on public policy issues affecting the short-term industry.

You should consider participating in these events as they come available, although participation may be restricted in some cases only to persons already operating within the industry.

Payday Loan Business Franchising

Franchise-businesses operate in almost every type of business area in the United States, and payday lending is not an exception.

However, what is ordinary for many of the available cash advance franchise opportunities is that they have very high startup costs, ongoing fees, financing costs, as well as strict financial requirements for those seeking to open a franchise payday lending location.

One of the available franchise businesses in payday lending, according to Entrepreneur magazine's "Franchise 500" list, is Cash Plus Inc.

California-based Cash Plus Inc. is a franchise opportunity for starting a payday loan business, with check cashing, & related services, and has been franchising since 1988 (the company was founded in 1985).

For 2011, their total number of locations was 59, of which 2 were company-owned, and 18% of franchisees owned more than one unit. To expand, according to their marketing material, they are actively seeking franchisees in several states, including California, Florida, and Nevada.

› Starting a Payday Loan Business

Cash advances should be used for short-term financial needs only, not as a long-term financial solution.

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