Category: Trends & Tactics

04
May

Ending Debt Traps in the Payday and Small Dollar Credit Industry

Financial Services Committee

Payday loans, small dollar loans… the pros and cons of a federally mandated 36% APR. Where do folks go if small-dollar lenders are forced underground?

No doubt, more than a few legislators “get” that the elimination of small-dollar loan products does not solve the basic problem: 70% of US households cannot get their hands on $500 cash in an emergency! [Watch the Video below.]

Yes, this is horrible. Yes, few of my readers here can relate to this fact. Unemployment is at record lows. Our economy is kicking ass! Employers are struggling to secure talented employees.

And yet, we have a problem. The publicly traded lenders are an easy way to gain a bit of transparency.

ENOVA reported they’ll loan $1.2B.

CURO  reported just over $1B for their year.

Robert Sherrill, CEO, Imperial Cleaning Systems is a convicted felon who used small-dollar loans to make ends meet and establish a successful business after serving time. The “Financial Services Committee” is SO BIASED and uninformed while residing in their Ivory Towers, that they actually accused Mr. Sherrill of testifying favorably about payday loans “in order to get clemency from President Trump!” Egads…

House Financial Services subcommittee on consumer protection and financial institutions hearing, “Ending Debt Traps in the Payday and Small Dollar Credit Industry.”

Here’s the Video to the Hearing:

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10
Apr

Payday Loan Funded in 120 Seconds: Real World Example on a Sunday

  1. A funded loan in 120 seconds? On a Sunday? My story below about a borrower named Tiffany will blow your mind. Instant funding. 24/7/365. No friction. No delays. Funds available to the borrower in minutes. No ACH. Easily REMARKET to your past borrowers! This is how you build your “book.”
  2. Following Tiffany’s story, Loan Businesses for Sale TODAY  listed below [TX, PA, AZ, CALIF…]

Tiffany broke down into tears! The baby’s screaming, she spilled her coffee, and her tire shop wants $300 to replace the two front tires on her 2009 Honda.

It’s Sunday at 1 pm.

What to do?

Tiffany has $76.89 in her bank account. She doesn’t get paid by her employer Allstate Call Center Services for 10 more days.

So, Tiffany, [like 14,000,000+ folks per the FED: “40% of US households can’t come up with $400 cash in an emergency!”] whips out her phone, types Dallas payday loan, clicks on Fast Cash Dallas, submits her short loan application online… and BAM! INSTANT FUNDING is here TODAY!

IMMEDIATELY, the following happens:

  • Step 1: Fast Cash Dallas, via 100% automation, sends an SMS text message having a link to her bank account that prompts her to enter her bank login credentials. [Could be an email if she prefers.]
  • Step 2: Tiffany clicks the SMS link and logs in.
  • Step 3: Fast Cash Dallas “looks” at the past 365 days of Tiffany’s bank account activity in “read-only.”

LESS THAN 2 MINUTES LATER, Tiffany has $400 credited to her Wells Fargo debit card. The new tires are on 30 minutes later, Tiffany pays for the tires with her Wells Fargo bank card and she and the baby are off…

Fast Cash Dallas “liked” what they saw, approved Tiffany for $400 and “pushed” the $400 loan proceeds straight to her.

WTF JUST HAPPENED?

On a Sunday at 1 pm?

With zero human intervention?

  • Tiffany’s Wells Fargo bank account was verified.
  • Tiffany’s Driver’s license/ID is verified
  • Tiffany’s Allstate call center payroll deposits were verified.
  • Tiffany was identified has having previous payday loans with Sunset Financial Services and Sunrise Cash Advance AND paid off.
  • Tiffany’s Dallas location at the tire store was verified
  • Tiffany’s address and apartment rent payments were verified
  • Tiffany’s Wells Fargo bank balance at this very moment – Sunday 1 pm – was determined
  • Wells Fargo had charged Tiffany 2X totaling $66.40 for NSF’s during the past 60 days.
  • Tiffany’s past 365 days Wells Fargo bank account expenditures were reviewed
  • Tiffany’s cell phone bill payments were verified
  • It was verified Tiffany was not applying for more than one payday loan simultaneously with other payday loan companies (stacking)
  • Tiffany has been at the same address for 8 months.
  • Tiffany holds a massage therapy license. Who knew?
  • No need for Fast Cash Dallas to buy an expensive Tiffany FICO credit score.

Fast Cash Dallas has automated its loan approval process.

And this isn’t Tiffany’s first rodeo.

The moment Tiffany hit “Submit” on her phone, AI (artificial intelligence) kicked in combined with automation, integration with credit reporting agencies, instant bank verification platforms, a same day 24/7 push funds service…  

Tiffany is “stored” in Fast Cash Dallas’s database. She opted-in to receive text messages with “refer a friend” rewards, special offers… in the future.

The next time Tiffany needs some cash, who do you think Tiffany will borrow from?

Fast Cash Dallas already has Tiffany’s Wells Fargo card info. Bam! $$ in 60 seconds!

Again: Instant funding. 24/7/365. No friction. No delays. Funds available to the borrower in minutes. No ACH. Easily REMARKET to past borrowers! This is how you build your “book.” This is how you “Build to Sell.” [This is a good time for you to read my, “Why Buy Instead of Start a Loan Business.”

This is “The Business of Lending Money to the Masses Profitably Today.”

 

OPPORTUNITIES TODAY:

  • 10+ locations in Texas. Internet component growing swiftly. Turn-key.
  • Philadelphia check cashing store
  • Hawaiian Gardens [Los Angeles] payday loan location
  • Los Angeles 100% title loan store
  • San Diego payday loan store
  • Arizona car title loan store [No payday loan competition in AZ!]
  • Houston Loan store
  • Tribe portfolio capital infusion
  • Cutting edge tech & AI for lenders available. These folks don’t buy association booths; that’s old methodology!
  • Iowa payday/check cashing stores
  • Earn 15% – 18% ROI in Texas collaborating with CAB/CSO’s.
  • Puerto Rico title loan store opportunity
  • Want to some consulting from the Pro? Schedule a call via Clarity 

Interested in the above? Send an email to TrihouseConsulting.com with the appropriate subject

Meanwhile, if you’re still trying to figure out how to get started in the “business of lending money to the masses,” check this out:

How to start payday loan business, title loan business, loan business
Click Here: $337.00 Immediate PDF Download


If you’re worn out spending hour upon hour searching Google for consumer loan business strategies, know-how, software, licensing, consumer credit reporting, sample contracts, collection tactics, profitability, how much start-up capital you need, anticipated default metrics, and on and on and on… Our “Bible” delivers ALL THESE ANSWERS AND MORE!

How to loan money to consumers! Payday loans, car title loans, installment loans, line-of-credit loans… via the Internet and storefront models.

Answers to:
How profitable are they? How much do these businesses earn?
Do you need a license?
We update our “Bible” every 3 months.

Click the Buy Now Button: $337.00 Immediate PDF Download


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28
Mar

How to Open a Loan Business-Why Buy Instead of Start #17

Why You Should BUY, Rather Than START, a Consumer Loan Business

Fact 1: Since the beginning of human existence, average Joe’s have been bartering, borrowing, stealing, begging, and trading time… for MONEY/STUFF.

Fact 2: We have been, and always will be, a society of Debtors and Creditors. This sucks but it’s a fact. [For a great listen while you’re getting in your daily exercise, get the audio version of David Graeber’s, “Debt: The First 5000 Years.” It’s a fascinating book about the impact of debt on history.]

Storefront, Internet, kiosks, blended… Money Lending can be VERY PROFITABLE.

So… why buy rather than start?

Startups fail. Almost always.

10,000+ “Baby Boomers” are turning 65 EVERY DAY! Many Boomers made their money by lending money. Boomers kids & grandkids do not want to be in “the business of lending money to the masses.” Frankly, the family members of Lenders are OFTEN embarrassed by this business. Right or wrong, this theme is prevalent in our industry.

The Boomer generation owns more businesses than any other generation in HISTORY!

Boomers need to sell. I know this because I receive calls and emails every week from them.

Existing consumer loan stores and internet companies already have the infrastructure in place. They’ve built out their store, maybe they have a website – most of them look like garbage and do not generate loan transactions, they have experienced employees in place, loan management software, relationships with the sub-prime credit reporting agencies and payment processors that enable instant bank verification and same-day funding… In other words, they are LENDING TODAY! You don’t have to waste 90-120 days to put your money to work! HUGE!!

Consumer loan companies already have a database of existing borrowers. This too is HUGE! You really think you can open up a brand new location or launch a website and immediately take market share? You had better have the skills in place already! You will buy leads!

Consumer loan businesses already have historical financials. Examine the cash flow. Break down the numbers. Your 1st look will mimic an IRS tax return. Your goal is to determine the “Seller’s Discretionary Earnings.”

There are not a lot of buyers for these businesses.

YES, you can make a “ton” of MONEY.

Yes, in 33+ states you can charge as much as $30 per $100 loaned. A few states have zero prescribed maximum fees; like Texas.

Tribe lenders and their servicers can lend anywhere they choose. [But why push the envelope?]

Your inventory is moola, cash, $$$$, MONEY! You’re not investing in vegetables, tires, senior care facilities, selling real estate like millions of other agents, making donuts and coffee at the crack of dawn, knocking out burgers, running a 24 hour 7-Eleven, dealing with gym memberships, fixing cell phones or computers, a “Merry Maids” cleaning service… YOU GET THE PICTURE!

Other than the business of lending money, what other industry offers you the potential of earning a 100%+ ROI?

Perceived “moat” or “Barrier to entry.” Looking from the “Outside In,” the business of lending appears to be an overwhelming chasm of licensing, bonds, regulations, bad press… GOOD! Let everyone else start a yogurt shop! Look! Total knuckleheads have applied for and been approved for a state license to loan money. Peter Thiel [PayPal Cofounder] wrote an excellent book called “Zero to One.” He focuses on “economies of scale” and advises, “First, dominate a niche market; second, scale up.” I have a client who focuses on Haitians in Florida and is “killing it!” Another client specializes in lending to Koreans in Los Angeles. Do you know that “baby boomers” make up 37% of the US demand for short-term loans? “You don’t want to be the first mover. It’s better to be the last mover  – that is, to make the last great development in a specific market and enjoy years… decades of profits.” Launch, Focus, Dominate your Niche and then expand into related, broader markets. Who doesn’t need MONEY?

You can bring your existing talent, knowledge & strengths to a “tired” loan company, replace its long-time owner, and create extraordinary value.

MANY existing owners are simply tired of being beaten up by the media, regulators, competitors…

The majority of the consumer loan businesses for sale today were launched years ago. A fresh mindset injecting new energy and enthusiasm is OFTEN ALL that is needed to 5X the marketable value of the acquired loan business!

Done right, the cash flow of the business can service the debt carried by the seller. They do want to sell their business after all!

Don’t focus on stupid valuation formulas postulated by generalists; 2X or 4X or whatever EBITDA for example. These are lazy, cop-out valuations! Hint: think “seller’s discretionary income [SDE].” Simply put, SDE is how much total cash flow the seller has been enjoying. [Don’t take the P & L at face value. The business is paying for the Mercedes, the kids phones… A motivated seller may exit at 1X SDE. You grow it 10%/year for 5 years? A 5X+ SDE is achievable! Add your inventory – which is $$$, CASH, MONEY… not rotting bananas, remember! You’ve just built a tremendous asset for yourself. [Shameless Plug. Grab a copy of: “A Guide to Consumer Loan Company Valuations.” [Scroll down to the 9th item.]  

By employing today’s technology, you can operate a loan business from ANYWHERE.

Skip the startup B.S!

Why start from scratch?

Why duplicate?

Buy, grow & innovate. Acquire. Grow revenue. Increase profits. Build an asset.

Grow your business 10% every year for 7 years; it will double in size! Your cash flow increases. The value of your asset increases. You build wealth.

Remember Fact 2: We live in a world of Debtors and Creditors. This sucks but it’s a fact. Money Lenders will always be with us. Be a Money Lender NOT a service provider, a vegetable purveyor, a burger franchisee, a _____fill in the blank!

Are you a BUYER? Are you a SELLER? Have an IDEA, a TOOL or a SERVICE for Lenders? Talk to me… Jer@PaydayLoanIndustryBlog.com

YOU control your Life. YOU control your future. Follow the MONEY! Be the MONEY!!

I’m inundated! Tell me about you, your goal and your resources. I’ll connect you! I know of opportunities TODAY in PA, CA, TX, TN, AZ, VA, IL, Internet… Tell me about you! I can help. PS: Skip the “Google” searching. You will not discover great “deal flow” on BizBuySell.com. This is about relationships!  If the deal is on an Internet Biz listing, it’s junk. YOU NEED TO GET UPSTREAM!

Want to learn more? Have an idea? Want to share…” Reach out to me via my online form.

Definitions: In this discussion, Consumer Loans mean:

  • Payday loans
  • Installment loans
  • Car title loans
  • Cash advances
  • Personal loans
  • Essentially, loans made to consumers that do not require collateral; other than a car title loan
  • We can throw check cashing businesses in this bunch as well.
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15
Mar

Payday Loan Industry Report

As in everything in life, there is a caveat to this “Payday Loan Report.” That is, I’m referring to single-payment loan products. This is an important distinction because the payday loan industry has been evolving away from “payday loan single-payment” loan products to installment loan products for the last several years.

Example: ENOVA, a publicly traded “payday loan company did roughly $300M in loans last quarter. Of that, approximately 12% was a “payday loan” product. That’s down from 4-5 years ago when the “payday loan” product exceeded 70% of their loan volume. Installment loans tend to have larger loan principals and somewhat longer payback periods. This is the industry trend!

Additionally, some states report fewer loan transactions. As if “business is down.” That’s not accurate. The state’s rarely account for internet generated payday loan/installment loan/line-of-credit loan volume. AND, they completely ignore the tribe model!

What is a Payday Loan?
A payday loan is a small amount, short-term loan. The consumer must either provide the
lender direct access to their checking account or write a post-dated check for the loan
amount plus a fee based on the original loan amount.

Typical Payday Loan Terms

The terms for payday loans are determined by the licensing model implemented by the Lender.

Many Lenders employ the State license model.

As an example, here are the legal payday loan fees allowed in the state of Washington.

  • Minimum Loan Term: a due date on or after the date of the borrower’s next pay date. If a borrower’s next pay date is within
    seven days of taking out the loan, a licensee must set the due date of a small loan on or after the borrower’s second pay date.
  • Maximum Loan Term: 45 days, unless the term of the loan is extended by agreement of both the borrower and the licensee and no additional fee or interest is charged
  • Maximum Loan Amount: $700, or thirty percent of the gross monthly income of the borrower, whichever is lower
  • Maximum Fee: 15% on the first $500. 10% on the amount greater than $500
  • Example: A loan for $500 + $75 fee = $575 repaid. A loan for $700 + $95 fee = $795 repaid.

On the other hand, California law specifies a maximum loan principal of 15% of the amount of the loan. [Basically, that’s $17.66 per $100 loaned.]

Florida payday loan laws specify 10% of the amount of the loan principal with a $5.00 first-time application fee.

The Tribe Model payday loan fees vary also. The average fee charged a consumer by a Native American federally recognized tribe is typically $20 – $30 per $100 loaned.

The Texas CAB/CSO model does not dictate minimum payday loan fees.

Payday Loan Borrowers’ Rights
In some states, payday loan borrowers are entitled to an installment plan at any time prior to default. Borrowers do not have to pay a fee for the installment plan and have from 90 to 180 days (depending on the original loan amount) to repay the loan in a series of installments.

Tribe payday loan lenders often offer various installment plans as well. This policy and the fees are prescribed by the TLE [Tribal Lending Enterprise].

The average payday loan is $392.

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14
Mar

HELP! Ability to Repay Rule by CFPB: Notice of Proposed Rulemaking & Payday Loans

HELP!

There is a CFPB Notice of Proposed Rulemaking [NPRM] expiring May 15th that rescinds the ATR (Ability To Repay) portion of the rule.

YOU SUPPORT THIS NPRM to help your customers, your employees, your family, and your business!

So… stop whatever you’re doing now! Provide comments and engage your customers.

FiSCA (Financial Service Centers of America) has MADE THIS REALLY EASY FOR US!

FISCA created the “We Deserve Credit” campaign to assist in engaging our customers and employees in this important effort.

How Can You Help? Generate comments & petitions! Just like our antagonists do. Remember my EXAMPLES? CLICK HERE

How to start a payday loan business

Payday Loans & the CFPB

The FISCA “We Deserve Credit” Campaign makes it easy.

Comments:
Gather comments & signatures for the petition to support the NPRM.

FiSCA has set up an easy way to do both. Share FISCA’s web portal with customers and employees. Computers, tablets, and smartphones can be set up in your offices for customers to use. Same IP address? Not a problem.
The link for the comment portal is http://www.wedeservecredit.com

Petition:
The link for the petition portal where a customer can just sign the petition and not leave a comment.
http://www.wedeservecredit.com/petition

How you can get the word out? EASY!
FiSCA has resources to help you publicize this campaign. There are links below for promotional materials as well as sample email and text messages.

Poster: FISCA Poster PDF

HandOut: FISCA Handout PDF

Click Here for FISCA sample emails and text messages:

Keep a count of how many emails/text messages you send out. Please keep track of the number of recipients for each email/text message you send out.

More support is on the way from FISCA! They are engaging an outline that company owners, shareholders, etc. will use to write their own letter.

Your customers and employees MUST be alerted. They will suffer the most if you fail to act.

We’re smart! We’ll survive if we fail to take action TODAY! Our customers, our employees, our vendors, our local retailers… may not.

Meanwhile, to start or improve your loan business, Click Here to Begin. Schedule a call or pick up a copy [PDF] of the latest version of our “Bible: How to Loan Money to the Masses Profitably.”

Jer@PaydayLoanIndustryBlog.com 702-208-6736 Starting a loan biz? Buying a loan biz? Need to improve your loan biz? Reach out…

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