Future of the Payday Loan Industry-Joint Ventures


1) You’re not simply a payday loan provider, a car title loan lender, a rapid tax refund agent, a check casher, a bill pay processor, a rent-to-own center, a pawn shop… you’re in the micro-lending industry; a giant niche worth billions of dollars annually throughout the world.

2) Embrace the Internet or Die!

3) Joint ventures and partnerships can make a great deal of sense.

4) Canadian affiliate program opportunity.

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Although not a new trend, the combination of brick-n-mortar locations with an Internet presence is certain to eventually become the dominate model. We continue to stress this strategy over and over again to our clients for whom we consult and in our own store and Internet businesses.

If you have a physical location(s), why would you choose to be solely dependent on attracting potential clients from a 5 – 8 – 10 mile radius around your store when, with the aid of a little technology, you can service residents of your entire state or province. And it’s not a huge stretch to service an entire country. In addition to actually funding these loans, there are a multiplicity of methods to develop revenue streams from these leads. See: Payday Loan Affiliate Programs

Sure, more than a few of your customers insist on, and are most comfortable, with face-to-face transactions only. But we all know that consumers in larger and larger numbers are becoming more and more comfortable conducting their business via the Internet.

Another trend we’re witnessing is joint ventures between payday loan, car title lenders and other micro-lenders in niches such as installment lending, rapid-tax refund providers, and more.

Let’s get specific…

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Take the recent announcement by BHM Financial Inc. regarding their partnership with The Money Stop.

The Money Stop is a payday loan chain having physical locations in British Columbia and Alberta, Canada.

BHM Financial Inc. is a financing company specializing in secured bad credit loans, installment loans, car title loans, mobile home and RV refinancing; mostly on the Internet.

The strategy for this partnership is that, until their affiliation with BHM Financial, The Money Stop was only able to finance small dollar amounts with short lending terms (payday loans). Because The Money Stop is now offering financing through BHM, they’re able to offer their clients larger loans with flexible rates and longer repayment terms regardless of the client’s credit history. This permits The Money Stop to gain new business they might have otherwise lost due to not having the capability of offering these types of loans.

BHM gains the added business brought in by individuals seeking loans from local lenders in face-to-face-transactions. Until now, BHM Financial was strictly an Internet lender. BHM Financial’s problem was that consumers are not always comfortable applying for a loan online, and BHM has the majority of their application process on-line. The team at BHM Financial felt they were missing out on the opportunity to enter transactions with these non-Internet savvy consumers. Their partnership with The Money Store enables them to service these consumers by allowing them to apply in person with a local lender. Through The Money Stop, BHM Financial Inc. can offer the more personalized, one on one service that BHM found difficult to accommodate via the Internet.

Specifically, why is this partnership good for The Money Stop? Well, as our readers know, the majority of payday lenders (depending on locale) are only able to advance small sums amounting to a percentage of the client’s paycheck. Additionally, repayment was due on the client’s payday with little flexibility in repayment terms. Now, due to its affiliation with BHM, The Money Stop will be able to offer car title loans from $1,000 to $10,000 with flexible repayment terms anywhere from 1 to 4 years in length. New for The Money Stop, these loan products are called car-title loans and they are primarily given to individuals who cannot secure financing through standard financial institutions because of bad credit or no credit. The loans are secured by the borrower’s vehicle and because of this collateral, the loans are funded regardless of the borrower’s credit history.

The Money Stop will continue to offer all of the loans and services they previously offered and will simply add BHM’s car-title loans and mobile home and RV refinancing to their offerings. BHM assures that The Money Stop’s clients will experience the same loan process they have always experienced. Car-title loans can be approved in hours and funded in less than 24 hours and the process can all be completed at The Money Stop’s physical locations.

So… what’s the point?

1) Again, we are NOT simply providers of one or two specific products. Micro-lending is what we do.

2) We must be flexible and creative. Our product lines are evolving. Who knows what our collateralized and non-collateralized loan products will look like in the future.

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3) We need software that offers an easy transition into creative products and services.

4) We need a web site. Even if we start with a simple 3 or 4 page web site capable of simply emailing a basic application. This basic site will allow us to play and experiment with design, traffic generation techniques, and more. A basic web site will help establish legitimacy in the eyes of many of our consumers. You can accomplish this basic goal for as little as $500 in today’s market place. (For more on this email: )

5) Joint-ventures and partnerships with companies offering complementary products and services can make a great deal of sense. Combining the brick-n-mortar world with an Internet presence must be accomplished for future survival.

PS: our Canadian readers may want to consider a relationship with BHM Financial as well. BHM Financial Group is expanding throughout Canada and is currently accepting the registration of additional Payday Loan Affiliates.

Become an Agent and earn 10%!

If you are the owner of a Payday Loan, Cheque Cashing, or another type of short-term lending business in Canada, you can now become an agent of BHM Financial and start offering car title loans (loans secured on a vehicle) for $1,000 – $10,000 and earn as much as 10% commission up to $250 per application financed. Become an agent and start offering your clients the convenience of secured loans right from your storefront!


Canada Payday Loan Laws & Legislation Update

The Province of Ontario will complete its regulation of the payday loan and cash advance industry as of December 15, 2009. This includes includes a maximum rate of $21 per $100 loaned. Included in the new regulations are strong consumer protections in conjunction with good, solid, and fair legislation thus, assuring the future of the payday loan industry in Ontario.

Shortly, the Province of Saskatchewan will announce the maximum rate of borrowing for payday loan transactions at $23 per $100 loaned. Saskatchewan becomes the fifth province to have set a maximum cap for payday loan transactions.

Ontario joined Nova Scotia and British Columbia in being exempted from Section 347 of the Canadian Federal Code. This move allows the Province of Ontario to implement a maximum rate and enabling legislation for payday loan lending.

The Province of Alberta is also in the final steps of completing its exemption from Section 347.

The provinces of Manitoba, New Brunswick and Prince Edward Island are still in the process of negotiating payday loan legislation, maximum caps, and licensing.


How to Start a Payday Loan Business

Starting a payday loan business has never been easier. Sure, there are some state or provincial regulatory issues to deal with. And you’ve got to navigate through the business structure scenarios available to you; LLC, S-Corporation, C-Corporation, Sole-Proprietorship, etc. ( A good introductory to this subject is Garrett Sutton’s book “Why Form A Corporation” from the “Rich Dad Poor Dad” book series). And yes, we know the Obama administration has lot’s of ideas that will eventually impact the payday loan, car title, check cashing and RAL ( Rapid Tax Refund ) industries. But hey, these little impediments simply eliminate the entrepreneurs lacking drive, ambition, guts and a degree of risk tolerance.

“Ease of entry” is a term that’s often tossed around by knowledgeable folks when considering entry into a new business. Mature entrepreneurs realize that barriers to launching a new business, like the payday loan or car title loan niches, are simply opportunities for them. They realize most people are simply lazy!  They want instant gratification. They want everything laid out for them. Actually they want everything done for them; and, they want it all done for free.

The point is, if it’s easy to enter a new market, a new niche, a new industry, and the perception is that a ton of money is being made, then competition will certainly appear. On the other hand, if on the surface, the general consensus is that it’s too difficult to jump through the hoops required to enter an industry such as payday loans, the typical new business dreamers will never do the work or perform the research to enter that market and compete. And that can be a good thing and a bad thing…

Why? Obviously it’s good when you’re in an extremely lucrative market and you have little competition. However, there is strength in numbers. There is strength when a significant number of competitors exist in a market having large numbers of customers. A large, competitive industry with large budgets can communicate their products and services benefits to consumers, the media and legislators. PAC’s (Political Action Committees) can be formed to fight regulatory encroachments by competing industries – such as banks and credit unions versus payday loans and car title loans.

The consumers, employees and businesses offering and using our services are voters. Obviously, the more voters who understand the benefits of our products the better our ability to survive. Never doubt that there are a great number of other industries that want our customers badly. They would love to see us go away! And they will use every ruse and distortion to accomplish their goal of eliminating us.

As a side note, it’s interesting that whenever actual customers, that is actual users of our products and services are interviewed, we are viewed quite favorably when compared to banks, credit card companies and more.

So… if you’re interested in starting a payday loan business, entering the car title loan industry, offering Rapid Tax Refund products or, for that matter, starting any kind of business that is new to you, do not fear the initial difficulties you’ll encounter. Consider these impediments to simply be part of “weeding out the chafe;” the elimination of the lazy and the incompetent.