How to Open a Payday Loan Business in Florida
Payday loan businesses provide a valuable service in many communities, as they give clients an advance on their expected paycheck and help to tide them over for a few days. Payday loan business owners make their money from the fees and/or interest charges that they apply to these advances. For aspiring entrepreneurs, a payday loan business can be a great business opportunity; but like all businesses, the owner needs to understand the various rules and regulations. Payday loan companies fall under strict state guidelines, and business owners in Florida need to know what these are before they can get their business up and running.
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Instructions
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Decide if you will start your own business or purchase a franchise. Buying into a payday loan business franchise can provide the security and start-up information that are necessary to get a new business off the ground. Payday loan franchises range in cost from around $25,000 to upwards of $150,000 or more.
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Learn the Florida state laws that regulate payday loan businesses. According to Florida law, a payday loan cannot exceed $500, and clients may only take out one loan at a time. The loan length may be anywhere from 7 days to 31 days, and clients may not extend, consolidate, rollover or renew the loan. Finance charges for payday loans may not exceed 10 percent. If the client fails to make the required payment, the lender may take the client to civil court, but the lender cannot press criminal charges against clients who do not or cannot pay.
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Contact an attorney to assist you in drawing up the contract that you will use for your clients. The contract must be clear, and all explanations about payments and charges must comply by state law. The contract should contain the full details about interest charges and any extra fees. Include time length of the loan and final date on which payment of the loan is due, as well as results for failure to repay loan and any other terms of the loan.
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Apply for the necessary state business license. Contact the Florida Secretary of State to complete the necessary applications for a business license to operate a payday loan business.
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Select a good location for your business. Think about the customers that you will be working with, and select a location that is convenient for allowing them to reach your business easily.
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Hire all employees that you will need for your business. Be sure to complete the necessary new hire reporting as required by the state of Florida.
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Create a screening process for clients. You will not have the time to run a credit check on each customer, but you can develop a screening process that is most effective for your business. Two forms of identification, such as driver's license and Social Security card, a pay stub to show employment and the most recent tax return are standard.
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Tips & Warnings
Payday lenders have a little extra room when it comes to fees and finance charges. While they may only charge 10 percent interest, the state of Florida does allow them to affix extra service fees to the loan. These service fees must be laid out carefully, however, and cannot be presented as finance charges.
References
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