The Business of Lending Money to the Masses

The Business of Lending Money to the Masses 

I’m asked every day if there is still an opportunity for lenders to achieve an extraordinary ROI on their money by lending money to the masses.

How to Start a Loan Business

No doubt Dear Reader, you are inundated with ads daily offering you immediate cash via direct mail, TV, billboards, Fintech offerings,, radio, podcasts, online ads … just like I am.

So… you’re jaded. You’re an investor and an entrepreneur. You’re immune to these pleas made to borrowers to accept a lenders’ money.

WHO CAN”T GET THEIR HANDS ON $700 in a pinch?

The answer? Tens of millions of ordinary people all around the world.

According to the latest research by the Center for Financial Services Innovation (CFSI), 57% of Americans are not financially healthy. The situation is critical – 40% can’t come up with $400 in an emergency. The FED’s numbers are that 70% of consumers cannot come up with $1000 in an emergency!!

DO YOU REALLY NEED THESE STUDIES? Look around. Talked to your Uber driver lately? Your DoorDash delivery person? Any friends or family members working in the “gig economy?” In spite of their college degree, they’re forced to work as a barista? How about your local entrepreneur who needs cash today in order to pay for his supplies or make payroll until paid by her client?

The car breaks down; they can’t work. The lights get turned off. Their bank NSF’s 3 checks; the biggest one first. That’s 3 NSF’s amounting to $105.00! Can’t pay the deductible for their elective surgery.


What loan products are these tens of millions of consumers and small businesses looking for? Advance law suit funding, lap band surgery, car title loans [Auto/RV/Motorcycle], bitcoin & crypto, single payment [Payday], installment, amortized, line-of-credit, personal loans, biz startup funding, cash advances, vacation funding, designer watches and on and on! YES! YOU think many of these loans are for stupid reasons BUT they make sense for millions of folks DAILY!

The need for access to money by consumers is so overwhelming that Lenders can focus on niches. Here’s a few listings to get your idea muscle moving:

  • Think Sofi: focused on student debt
  • SALT Lending: focused on bitcoin and ethereum as collateral
  • Diamond Banc: Loans on luxury watches
  • Lending Club: peer-2-peer lending
  • CasnNetUSA: payday and installment loans
  • Lending Tree: debt consolidation peer2peer
  • Joey’s Auto Title: face-to-face car title loans in Albuquerque
  • Norris Group: hard money RE lenders
  • Prodigy Finance: lends to international students to
  • Insikt: consumer lending [The founder started at the rear of a Latino grocery store.]
  • LendingPoint: small online consumer loans
  • World Acceptance: face-to-face sub-prime consumer loans; $120M/quarter.
  • Oakum: lends only to immigrants
  • Wilshire: face-to-face car title loans to Koreans in Los Angeles
  • Fulcrum: Online and face-to-face personal loans to Haitians in Miami
  • Blinker: sub-prime car finance via an phone app
  • Dave: sub-prime personal loans via phone app
  • Accion: funds underserved small businesses
  • Groundfloor: real estate platform for non-accredited investors
  • CircleUp: Consumer goods financing
  • Fluid: Founded by our friend Timothy Li. Consumer credit for students.

Put on your thinking cap! What experiences do you bring to the business of lending money? Challenges? Hardships? Don’t you think there are millions of others out there facing the same financial challenges you have?

Tap into this! How do you solve these challenges, service these millions of borrowers in a humane way AND MAKE SOME SERIOUS MONEY?

Little. Big. Lenders come in all colors and flavors.

Ready to launch your loan business? Start here: “The Business of Lending to the Masses.”

How to Start a Consumer Loan Business: Installment lending, car title loan lending, payday loan lending, personal loan business

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“How to Start a Consumer Loan Business & Lend Money to the Masses”


New Ohio Payday Loan Bill Near Passage

A new Ohio Payday Loan Bill will

  • bill would cap the life of a loan to one year
  • limit the amount to $1,000
  • cap the initial fee on that loan to 2 percent of any amount above $500
  • cap total fees collected at 60 percent of the principal
  • and cap monthly maintenance fees to 10 percent of the outstanding principal or $30, whichever is less.
How to Start a Consumer Loan Business: Installment lending, car title loan lending, payday loan lending, personal loan business

Click This Image for Some Light Reading 🙂 Over Your Weekend!

“Taking one side of the argument in the final version of a complex and far-reaching piece of legislation flouts transparency and is no way to enact legislation that will potentially cut off access to short term loans to Ohio residents and put hundreds of Ohioans out of work,” said Pat Crowley, spokesman for the Ohio Consumer Lenders Association.”


Texas CAB, Credit Access Business, Credit Services Organization Loan Model

Why Use the Texas CAB/CSO Model to Lend Money to the Masses?

Texas CSO-CAB Lending Model

Texas CSO-CAB Lending Model

In the old n’ times lenders funding payday loans – nowadays often referred to as installment loan lenders –  in states not having specific payday loan “safe-harbor” legislation, lenders like Curo, Enova, Elevate, would partner with a state-chartered FDIC insured bank (Bank of Delaware is one example) in order to charge payday loan borrowers more than the maximum state usury rates allowed.

This was the case in Texas, Arkansas, Pennsylvania, New Jersey…  The payday loan company acted as a “marketer, a servicer and a processor for the bank. This loan model is referred to as the “bank-model.”  The “bank-model” was extremely popular for years and resulted in substantial profits for the companies utilizing it.

As an example, a dated study by the Texas Consumer Credit Commissioner estimated 1.81 million loans were made in Texas using the “bank-model.”  $626 million dollars were loaned.  The average loan was $338 with an average APR of 511%.

The Federal Deposit Insurance Corporation’s Revised Guidelines for Payday Lending, which took effect way back in July of 2005, adversely impacted those payday loan lenders using this “bank model” to export usury rates across state lines.  This edict forbids banks from providing payday loans to people who have had an outstanding payday loan from any lender for more than 3 months in the previous year.  The Revised Guidance limits the frequency of customer usage of payday loans and limits the period a consumer may have a payday loan outstanding from any lender to an aggregate of three months during the previous 12 month period.  Based on an average term of 15 days, this effectively limits the number of payday loans that may be made to any consumer to six during any 12 month period.  All payday loans made from any payday lender would count against this limit.

So in the state of Texas, and Ohio and a few others, the cunning payday loan operators conceived of employing the “Texas Credit Services Organization (CSO) / Texas Credit Access Business (CAB)” loan model.

Texas CAB-CSO-Credit Access Business

The Texas CAB/CSO Model Explained

By implementing this CSO Model, we payday loan/installment loan lenders can service the continuing, unabated consumer demand for our loan products while remaining profitable enough to earn a fair return on our investments, pay our employees a fair wage, pay our taxes and support our communities.

The bottom-line is demand for the payday loan/installment loan product has been clearly established.  The CAB/CSO model is on a firm foundation with specific case law to support it; it has already survived a federal court case.  Additionally, the CAB/CSO model can yield higher transaction fees and margins than the bank model or, as in the state of Texas, the “Regulated Lender” licensing model.

The multi-million dollar payday loan companies have spent millions of dollars in legal fees to research and refine the CSO/CAB model; follow their example.

Texas: Do you know just enough to be dangerous? Do you need an in-depth understanding of how the Texas CAB/CSO consumer loan model works? Are you wondering how the 3rd Party Lender fits into all this? Why it appears you must pay to lend your own money? How do you get licensed to offer loans in Texas? Do you need a 3rd Party Lender?

We’ve got you covered! Our newest Training Manual is our 88 page:

Texas CSO-CAB Lending Model

Texas CSO-CAB Lending Model

“Texas CSO/CAB Model & Analysis: the Credit Services Organization Ver. 10.0.”

Table of Contents

What is a CAB/CSO

How a CAB/CSO Works

Nuts & Bolts of 3rd Party Lender

Key CAB/CSO Characteristics

Why Use the CAB/CSO Model

Pros & Cons Regarding the CSO Model

Strategies for implementing the CAB/CSO Model

CSO/CAB Software Solutions

Advance America & the CSO Model

Payday Lenders Strike Back

Key Legal Authority

Typical CSO Documentation


A Typical Consumer Loan Agreement


Key Characteristics

Key references

Basic Program Documents and Materials

10% loans under Texas Finance Code Chapter 302

Texas Credit Services Organization Act (Tex. Fin. Code Chapter 393) 

79th Texas Legislature, Regular Session

Texas Finance Commission Review

Texas Attorney General Review

Other Background Information

Developments in Other States



Lovick versus RiteMoney LTD

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