People get loans all the time to finance business and personal ventures. According to Statista, loans from commercial banks in February 2018 amounted to roughly 12.58 trillion U.S. dollars. Additionally, the total transactional volume in alternative lending in 2018 amounted to approximately 54,210m U.S. dollars. In the light of these statistics, it is evident that money lending is a booming business not only among the banks but also among the private lenders.
However, entry into the money lending business doesn’t automatically translate into success. Some have a hard time getting clients, whereas others end up making mistakes leading to the loss of huge sums of money. This article highlights some of the success and precaution tips that can help you out if you are considering entry into the money lending business.
Have a Specific Market
When your business is focused on the general market, it may be hard to get clients. Other than telling business people you will give them any loan amount, set a specific range according to your finances. Also, be specific on the locality that you are serving. Identifying a specific target is helpful in determining the location for your business. Additionally, it will be useful in choosing a marketing strategy. Marketing efforts yield better results when you are focused on specific individuals or businesses.
Know the Laws and Rules
The other tip is to ensure that you are familiar with the rules and regulations governing private lenders in your country. The guidelines in every country are different thus avoid reading guidelines for the UK if you are residing in the U.S.
Use the Right Systems and Update All Records
Choosing the right system to manage your business also contributes to your success and security. Use a system that is accurate and efficient to avoid costly mistakes. When hiring third parties to work with you, ensure that you check their qualifications, experience, and reputation thoroughly.
Consider Loss Mitigation
Consider loss mitigation services, such as those offered by Del Toro Loan Servicing. Their team is able to help you with the following services:
- Review and update terms for Lender prepared Modification
- Negotiate and Prepare Modification/Extension Agreement
- Develop Loss Mitigation scenarios including:
- Deferred payment programs
- Short Sale / Pay
Market Your Business
Market your business online and offline to attract more clients. There are lots of free online resources that you can use to market your business. For instance, a LinkedIn profile is free to create, and you can use it to boost your visibility. If you have a website for your business, consider starting a blog to boost your credibility and visibility. Publishing high-quality content on your website is a good strategy to establish yourself as an industry expert. This strategy will also attract more people to your website through the search engines.
Learn Proper Screening
When lending money, there are a number of factors that you need to examine thoroughly before making your final decision. Examples include collateral, ability to pay, and credit score. Learning how to screen borrowers can help eliminate those who are higher risk and prevents bad debts.