MyCredy - personal loans

Homepage / Blog posts / How to start a loan business in south Africa?

How to start a loan business in south Africa

The girl is holding a phone in her hands, on the screen of which it is written how to start a loan business in south Africa

New lending companies are opening every day. Every day people take payday loans online with high interest. So, if you are interested in the question ‘’how to start a loan business in south Africa’’, you are at the right place!

So, you have studied the market well enough and know about the differences between ordinary banks and online loan institutions. In turn, we will tell you what you need to open such a business from scratch.

Online lenders have the right to provide loans to people over the age of 18. Such a completely legal type of entrepreneurial activity is popular in south Africa, so many people want to start a loan business, providing themselves with a considerable income. Such firms are a good and profitable business idea, but they have certain nuances.

Advantages and disadvantages of opening a loan business

First you need to understand what exactly attracts businessmen in the activity of issuing loans to the citizens of south Africa. First and foremost is the possibility of a quick return on investment.

Other important advantages of starting a loan business are the following:

  • the possibility of issuing loans online, which allows you to minimize the cost of opening and maintaining offices, as well as the staff working in them;
  • loyalty to the so-called problem borrowers, with whom banks are extremely reluctant to work. The result of which is a constant increase in the client base;
  • reasonable licensing and provisioning requirements, much lower than for banking;

The only significant drawback is the constant tightening of control on the part of the state represented by the market regulator. But even this has a positive aspect, which is a gradual reduction in the number of loan organizations excluded from the register.

Business plan for opening a loan company

The procedure for developing a business plan for such an organization is not much different from any other business. It is necessary to solve several problems, which include:

  • Buying or renting an office. A legal address is required both for registration and for conducting business activities. Even when it comes to issuing online loans.
  • Recruitment. The company's staff includes a director, an accountant, and managers that work with clients. Specialists in finance and other areas are involved as additional employees, the number of which is determined by the scale and diversity of the organization's activities.
  • Advertising. In today's conditions, the most actively are used Internet methods of promotion.

How to start a loan business in south Africa?

Finally, it's time to answer the main question: how to start a loan business in south Africa. The procedure provided for by law includes the consistent implementation of several measures. Each makes sense to consider in more detail.

Registration of a legal entity

The opening of a loan organization begins with the registration of a legal entity. The most popular option is LLC. The advantages of this format for doing business are obvious and are as follows:

  • the minimum level of liability, which is limited to the owner's contribution to the authorized capital;
  • relatively simple registration procedure;
  • reasonable requirements in terms of control by supervisory authorities.

Registration for taxes

The next step in the procedure for opening involves registration with the tax authority. The essence of the event is the entry of data about a legal entity into the federal register. You need to provide thin information within 60 days and it is mandatory to fill in an IT77 form.


Are you planning to borrow money?

You can see the most popular and advantageous offers prepared by us below.