THE BLOG

10
Dec

Tip #6: How to Sell Your Payday Loan Business

10,000 “Baby Boomers” turn 65 years old every single day!

I know, based on the calls and emails I receive every day, several of these “Boomers” own payday, car title and installment loan businesses they want to sell.

Why sell? Retirement, divorce, tired, start another business, personal need for cash, partnership problems, key employee quit, want to move to Texas/Florida/Arizona…

And what’s the #1 problem I see when I evaluate one of these “consumer loan businesses?”

The seller has failed to prepare their consumer lending business to be sold! You can’t just wake up one morning and decide to sell your payday loan business, your car title loan store, your consumer lending company…

So, what to do? A concrete step a seller can do today? [NOTE: This Tip is an excerpt from our “How to Loan Money to the Masses Profitably – The Bible.”]

  • Make the decision today that you want/need to prepare your business to be sold 2 years from today. [Even, if it’s unlikely you WILL want to sell, your goal must be to PREPARE your business for sale!]
  • Don’t ever issue equity to retain your key employees! It makes a sale of your business too complicated! Use a “Stay Bonus.” A “Stay Bonus” is a cash reward paid to your key employee(s) as a reward for staying with your consumer loan business through the sales transition to the new buyer.
    • Often, the buyer needs somebody who knows the business, the customers, the loan management system… and can keep the business running after the seller departs.
    • I’ve been involved in the purchase and sale of a LOT of payday loan & consumer lending businesses over the years. Many of these businesses are purchased by absentee owners. OFTEN, they absolutely insist the seller’s key employee(s) must remain after their purchase. So… how does the seller guarantee this will happen?
    • Basically, as you prepare your consumer loan business for sale down the road, you create a long-term cash reward program for your key employee(s).
    • IN A NUTSHELL: you set aside a cash amount equivalent to your key employee’s annual bonus in an account specifically targeted for each employee you want to remain on board through a sale. Allow your key employee to withdraw 1/3 of this account’s balance each year AFTER a 3 year waiting period!
    • Why is this important? If your key employee walks away from your company, they must make the decision to walk away from a SIGNIFICANT AMOUNT OF CASH AS WELL.
    • What else? When selling your company, at some point you’ll have to disclose this to your key employee. When you’re “selling” your key employee on your plan to sell your consumer loan company, you can “top up” the balance in the special “Stay Bonus” account you setup on their behalf.
    • Why this is important? Your key employee is richly rewarded for HELPING YOU SELL YOUR BUSINESS, to remain with your company and the new buyer and to make certain the sale of your business is successful FOR ALL PARTIES! WIN-WIN!

For more ideas, strategies and tactics for “How to Lend Money to the Masses Profitably,” get a copy of our newly updated “Bible” downloaded to your Inbox within 30 seconds: CLICK HERE TO GET YOUR COPY IMMEDIATELY.

How to Start a Consumer Loan Business: Installment Loans, Car Title Loans, Payday Loans, Consumer Loans

How to Start a Consumer Loan Business

04
Dec

Operation Choke Point: The Saga Continues & Dept. Heads at Dept. of Justice, FDIC & OCC SHOULD Roll!

This in from American Banker:

By: Dennis Shaul CFSA

“The small-dollar lending industry has long known that government bureaucrats with a partisan agenda were determined to bring the industry to its knees, but this illegal campaign went farther than anyone could have imagined — with those at the very highest levels of the Department of Justice, FDIC and Office of the Comptroller of the Currency targeting customers of regulated banks based on their personal bias.”

“Government officials abused their power to press forward with their own ideological agenda. Then, faced with a demand for accountability, they denied wrongdoing and sought to cover up their misdeeds. This is not a small-dollar lending story; this is a story of government agencies debasing their missions through the abuse of power.”

“Fortunately, the Community Financial Services Association, which I run, could afford the cost of a lawsuit and seek redress in the courts. CFSA was an original party to the lawsuit brought against the government and we participated in the preparation leading up to its filing in 2014. Our reasons for pursing a legal challenge to the actions of the FDIC and OCC were simple. First, we were seeking justice for our members who were harmed. Second, we were convinced there was a deliberate pattern of terminations of banking relationships that we wanted to bring to light. Third, if there was indeed a pattern, we’d be rendering a genuine public service by establishing the principle that no agency or group of people within an agency should be allowed to abuse their authority by exercising it in an unlawful or prejudicial manner. “

Here’s a link to the Full American Banker opinion piece by Dennis Shaul: Original