You should search your state’s business filing office to find out if a name has already been taken. [1] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source
Executive summary. You will need to briefly describe the nature of your business and why you think it will be successful. The executive summary should contain your mission statement as well as company information. As a startup, you should focus on explaining how your experience and background will contribute to the business’s success. [4] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source Company description. Explain the nature of the business, your intended market, and the market needs your lending business will satisfy. [5] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source For example, you might want to meet the small loan needs of your community, which are underserved. Market analysis. You should explain the size and distinguishing characteristics of your target market. [6] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source For example, you may want to make small loans to new immigrants in your community seeking to start a business. You would then explain how few lenders have tapped into that market. Also identify your competitors and describe their strength or weakness in the market. [7] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source Product line. Describe the loans you want to make. You should explain the advantages of your loans over those of competitor’s. [8] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source Marketing and sales. Discuss your overall sales strategy, including your plans for growth. For example, you may hope to grow geographically, offering your loans to a larger community. Or you might hope to grow by offering additional types of loans to your current market. [9] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source Financial projections. Based on your market analysis, you should forecast your projected finances for five-years out. [10] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source
Also identify your competitors and describe their strength or weakness in the market. [7] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source
Some money lenders have dipped into their retirement accounts, such as their IRAs and 401(k) accounts, to fund their loans. Experts encourage money lenders who do this to understand the risks that they are taking. For example, loans might not be repaid, in which case you could lose a large percentage of the loan amount. [11] X Research source If you seek funding from investors, then you will need to work closely with a lawyer to draft a prospectus to share with investors. State and federal laws tightly regulate how you advertise securities to potential investors. Your lawyer will need to be experienced in securities regulation.
Generally, you will assess risk by gathering information about the loan applicant’s financial history. For example, you would want to look at their income, FICO score, and other debt load. [12] X Research source
To find an experienced business lawyer, you can visit your state’s bar association website, which should run a referral program. You can research any attorney by visiting his or her website. Look for experience with business formation, as well as banking or lending experience. If you are starting a lending business for real estate, then look for an attorney who has real estate experience as well.
You can purchase your domain name from various registrars. Search the internet for “where to purchase domain name” and look at the different companies that provide this service.
To incorporate, you will have to file articles of incorporation with your state. Your attorney should be able to get them, or you can get them yourself from your Secretary of State. [14] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source
South Dakota’s application is available on its Secretary of State’s website and can be found at https://www. state. sd. us/eforms/secure/eforms/E0062V4-MoneyLendingLicenseApplication. pdf. In addition to state licenses, you may need municipal or local licenses. You must contact your state business licenses office and search for applicable licenses or permits. The Small Business Administration has links to each state’s office at https://www. sba. gov/content/what-state-licenses-and-permits-does-your-business-need.
Not every state requires that you register a “doing business as” name. You can check registration requirements with your Secretary of State office as well as with your county clerk’s office. [16] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source
You should check with your attorney whether or not you need to register the securities and which agency you need to register with.
You can apply for an EIN online. This is the preferred method. [17] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source To start the application, visit the EIN Assistant at https://sa. www4. irs. gov/modiein/individual/index. jsp. You can also apply by mail or fax by printing off Form SS-4 available at http://www. irs. gov/pub/irs-pdf/fss4. pdf. To find out where to mail or fax your form, you should visit the IRS website at https://www. irs. gov/filing/where-to-file-your-taxes-for-form-ss-4.
Under federal law, specifically the Fair Debt Collection Practices Act, you are prohibited from harassing or abusing the customer that owes you money. [18] X Trustworthy Source Federal Trade Commission Independent U. S. government agency focused on consumer protection Go to source Also, you cannot use false, deceptive, or misleading means to collect any debt. [19] X Trustworthy Source Federal Trade Commission Independent U. S. government agency focused on consumer protection Go to source If you fail to obey federal law, you and your business could face stiff civil penalties. [20] X Trustworthy Source Federal Trade Commission Independent U. S. government agency focused on consumer protection Go to source Each state will also have laws prohibiting certain debt collection activities. For example, in Iowa, you are prohibited from making illegal threats or from coercing or attempting to coerce a customer into paying a debt. [21] X Research source
To find a compliance professional, you can ask your lawyer for recommendations. Alternately, if you met anyone at a national conference or panel, you could contact them for a recommendation.
Rent is often one of the largest expenses for a new business. Accordingly, you should budget and not spend more than you can afford. Try to negotiate a one- to two-year lease with an option to renew. Because you don’t know if your business will be successful or not, you shouldn’t sign an initial lease for longer than that. Find out what other expenses you might incur in addition to the rent. For example, you could have to pay for maintenance and repair, upkeep, and utilities. Negotiate some add-on clauses, such as a right to sublease or an exclusivity clause (which prevents a landlord from leasing to a direct competitor at the same location).
Business tax identification number (or Social Security Number if sole proprietor) Business license Business name filing document Articles of incorporation with corporate officers listed (for a corporation)
If you are lending money for real estate, you will need not only the promissory note but also the mortgage note. Lenders working in the real estate field also typically use other documents, such as Letters of Intent (LOI) and preliminary title reports. [24] X Research source You should ask your attorney or compliance professional about what other contracts are necessary. For more information on loan agreements, see Write a Loan Agreement.
If you want to make a few loans to acquaintances or people in your neighborhood, you could rely on word of mouth. However, if you want to reach a larger market or grow more quickly, then you should consider advertising in newspapers or online. You should also consider advertising in the form of imprinting your company name on pens, paper, calendars, and other giveaway items. [25] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source
