Tag: start payday loan business


Payday Loan Franchise? Buy & Build? Internet or Store? Answers!

My pic HIGHLY Photoshopped!

By: Jer Trihouse. I received a call this morning from John. John wants to start a payday loan business. More specifically he wants to open a consumer loan business. He’s been researching the payday loan industry for 6 months. John’s question, “Should I buy a franchise? Or, should I start an online payday loan business? Do I really have to stick it to folks; charge the hell out of them in fees? Am I too late? What about a car title loan business? I have a $100,000 CD in my bank making no money! Can I put my money to work with an operator? How much can I get if I do? Do I need a license? Are these things REALLY profitable? I see them everywhere!”

NOTE: In my discussion below, payday loan businesses include all business to consumer – B2C – loan products. This means brick and mortar, internet and smartphone originated, short term [typically 14 days to 18 months] extremely expensive [100% APR’s at a MINIMUM ranging from $10 per $100 loaned to $35+ per $100 loaned for 14 days] small dollar [generally $100 to $1000] non-collateralized loans made to the approximate 50% of the USA demographic unable to get their hands on $400 CASH in an emergency.

If you are new to “the business of lending money to the masses profitably,” it’s likely you don’t know what a pathetic situation the typical household is in:

  • 42% of consumers say they do not have enough savings to cover at least three months of living expenses.
  • 47% of consumers say their spending equals or exceeds their income
  • 55% – more than half of consumers (138 million people) – are just “financially coping.”  These individuals are struggling with some aspects of their financial lives.
  • Half of all consumers cannot get their hands on $400 cash when the car suddenly breaks down, the utility bill is due, a prescription needs filling…
  • This sucks! Life in the USA should not be like this!! This situation needs fixing!!! I can’t fix it. You can’t fix it. WE CAN FIX IT!!! But that’s another Post!!!!
  • Hard to grasp, right? Here’s a link to just one of the hundreds of studies: Center for Financial Innovation

Here’s a link to a real consumer’s story and how she got $300 deposited on her Wells Fargo debit card using her phone on a Sunday within 120 seconds! Tiffany’s Story

So, here’s a list of the financial products that appeal to average folks who need cash immediately:

  • Payday loans [single-payment, principal and fees due on consumer’s next payday]
  • Car title loans [These loans are collateralized by the title to the car, truck, RV…]
  • Installment loans
  • Line-of-credit loans
  • I’m not referring to business to business loans, merchant cash advances, factoring, etc.
  • Additionally, I’m not covering check cashing stores. Check cashing is an extremely low margin business with a LOT of headaches. [Cash on the premises, face-to-face transactions, employee theft, owners must secure an MSB [Money Service Business] license from the FED’s…

Payday Loan Franchises, Stores, Internet…? Buy Cheap & Build?

This particular payday loan franchise company requires John to have about $215,000 to open. This consists of a $35,000 one-time franchise fee, $65,000 for build-out,  $15,000 for software, signage and miscellaneous marketing materials. This leaves roughly $100,000  “for the street.”

Finally, a 6% monthly commission must be paid to the Franchisor on the gross revenue of the business. That’s 6% on the gross revenue! As John explained this to me, the Franchisor has a system for payday loans – nothing else. That means,  if John develops a scrap gold buying business or if John adds car title loans or anything else for that matter, he must pay 6% on his total gross revenue; this despite the fact that the Franchisor offers zero support and expertise for these additional services.

This Franchisor cannot guarantee a specific return, but they imply John will earn 18%/month EBITDA. (This using a licensing model allowing 15% of the face amount of the loan to the consumer.) Of course, as in life, this potential return depends on a lot of factors. There are no guarantees.

So… should John purchase a franchise? With zero hesitation, I responded to John with an emphatic, “NO.”

BUT, I began to listen to the path John was on. I sensed the frustration John was experiencing. AND I sensed the answer to his initial question requires a macro perspective rather than a simple yes or no to, “Should I buy a payday loan franchise?”

For the past 6 months, John has used Google.com for keyword searches like, “how to start a payday loan business, payday loan software, payday loan industry, payday loan customer demographics, payday loan lawyer” and on and on…

He’s called and participated in demos of various payday loan software vendors such as SparkLMS, eChecktrack, Answers, Epic, Azo Blue, Infinity, Alpha Omega, IntroXL, TranDot, eCash, EData and more.

Additionally, John has reached out to legal counsel including Paul Soter, Claudia Calaway, Hillary Miller… to discuss compliance,  consumer contracts, arbitration agreements, licensing models (choice-of-law, state-by-state, offshore)… This led John to Allen Parker and the tribe model (a sovereign nation) and the Texas CAB/CSO licensing model.

John talked with the consumer data scrubbers; Clarity, DataX, CoreLogic-Teletrack, Idology, Microbilt, Factor Trust,  and more.

And of course, John contacted a few ACH providers like Advantage, LST, ACH Works… and the new payday loan”wire transfer” provider introduced at OLA. ($3.00 wire transfers using the EFT Network rather than the ACH system. Instant, same day funding! 24/7/365. Push your loan principal immediately to consumer debit and prepaid cards!!)

Then there are the web site builders like Frank Masotti, the lead generators, the SEO and SEM companies, outsourcing of call centers vs in-house, analytics experts, collection companies, reputation management companies…

After doing all this research and reading some of our training and start-up materials, John still didn’t have clear answers to questions such as:

Is the PDL industry saturated? Is there room for another payday loan lender? Maybe I should lend capital to an existing operator? (For example, there’s a team with 50 brick-n-mortars in 3 states offering 10% returns with personal guarantees. Or, an operator in Las Vegas with 3 locations is offering 3% per month with car titles as collateral.) Or, John wonders if he should act as a 3rd party Texas Lender by making capital available backed by a CD and an Irrevocable Letter of Credit? He’s been told he can earn 15% – 24% annually on his capital with very little risk.

Should John buy an existing consumer loan business from a motivated seller and then build it with renewed enthusiasm and energy? [Read my “Buy Then Build” Post.

John has correctly determined that there is a TON of opportunity in the payday loan – micro-lending space! The puzzle for John is to figure out HOW he wants to play it based on his goals, his family situation, his existing skill set, and his appetite for risk.

So… John asks himself the following:

Internet or store or both?

Should I Launch a new consumer loan business or should I buy or build?

How do I market? Online and off-line?

How do I deal with the evolution of borrowers using their smartphone to find my consumer loan operation? Millennials are coming…

Do I focus solely on payday lending, installment loans, car title loans, cash advances…?

What other products and services make sense to add to my consumer loan business?

Do I really need to invest in a franchise system or can I do this on my own?

How to Start or Improve a Consumer Loan Business: Storefront or Internet anywhere!

How to Start or Improve a Consumer Loan Business: Storefront or Internet anywhere!

“I’m concerned about my family (John’s health is questionable and he has a wife and 1 child) and their ability to carry on the business should something happen to me. Would my being part of a franchise system reduce this risk and add value to my new enterprise?”

“Do I need legal counsel on retainer or can I rely on the Franchisor to keep me compliant?”

“As a Franchisee, I’ll be part of a system, a group of peers in the same industry. How valuable is this? Or, do I go on my own and rely on my state organization, FISCA, CFSA and/or OLA to educate me and help me build my business? Will I have the time and money to be part of these trade organizations?”

What do you think? What would you do? For that matter, maybe you already made the decision! What are your thoughts? What would you advise John to do? Put on your consultant hat! It’s time to give back… LEAVE A COMMENT!


Are you ready to dig in? You think you can handle the business of lending money to the masses? Face-to-face? Or, you prefer to run an internet operation? Maybe open a tiny, limited office to get your state license and scale it via the Internet?

My Team and I have done it all! Started in 1998 with a single location in Garden Grove, Calif.

We are operators. We are teachers. We are consultants. We run Boot Camps in a “live” store. Consumer loans via the Internet? We do it. Loans via smartphones? Let us show you the way. Your journey starts here: Click Here to Get our Course. Read it. Study it. Keep it near you. It’s your “Reference Guide.” Then, call me. Here’s my direct number: 702-208-6736. It’s my cell! Crazy huh? Nope. There is a method to my madness! Every day, I get to talk to operators, entrepreneurs, folks with capital they want to put to work in consumer lending without having to run the day to day operations,  consumers/borrowers, vendors & platform providers offering new state of the art money transfer, loan software, analytics solutions, VC’s, Family Offices, tribe servicers, lenders with stores to sell, buyers,  website builders, smartphone application loan providers… and on and on and on! I LOVE IT! I LEARN EVERY DAY.

The business of lending money to the masses will never go away. [Doubt me? Read “Debt: The First 5000 Years.”]

Click the Buy Now Button: $337.00 Immediate PDF Download


Taking Action in Any Vertical

How start payday loan businessYou think confidence comes from believing in yourself and accomplishing things.

But really, confidence results from having close personal relationships with people who believe in you.

So, if you focus on surrounding yourself with these people who believe in you, you’ll have the confidence to take action. (Stolen from Dane Maxwell while being interviewed by Jamie Tardy.) Google them!

92% of the “entrepreneurs” I talk to: read, study, Google, waste vendors time and ultimately do nothing. “No guts, no fame.”

Get a job or “man-up.” Lady-up if it’s appropriate. It takes “huevos” to survive in the loan shark industry. Yes, my friends, peers and clients cringe when I use that terminology (take that Scott C. :o) But, they don’t pay my bills or my property taxes here in Calif.

The OLA conference looked like a morgue. Everyone left standing looked as if they had survived the battle of the bulge. Put this temporary blip behind you! Now that we can serve consumers lacking traditional bank accounts, we have an army of 60M – 70M borrowers waiting for a smart Team to figure out how to deliver the $$ to them.

So, wake up, stand-up, find the right collaborators and get back in this small dollar loan game!

Lead prices have crashed, demand for them has tanked, more lead gens and aggregators are launching; crazy but true. Big data guys are cutting your underwriting costs.
ACH providers have jumped over board like rats but new ODFI’s are already here to fill the void.

The tribe model will persevere. It will require patience and persistence but the tribes will prevail; zero doubt!

And, if you were one of the operators employing the state licensing model due to fear, lack of guts, or shrewdness, YOU WON – so far.

Yes! The over-used word “pivot” has occurred in the PDL space. But, let’s NEVER forget that borrowers by the tens of millions are frantically searching via their smart phones, tablets, iPhones, Androids…for a LENDER TO HELP THEM.

Is that lender you? Or, are you a quitter?

Again: Disruption = opportunity. One word to describe the current state of our industry? DISRUPTION.

So, what you gonna do? I know what I’m doing? I’m buying paper at 8 cents on the dollar.

Finally, our VERY BEST WISHES TO A WONDERFUL FRIEND in the PDL space: Jerry (Jerome) Greenberg. We made a lot of $$ together. Hope he gets back in the game!! Best wishes to his family as well!!

Jer at Jer@TrihouseConsulting.com TALK TO ME! Good – Bad- Indifferent…


In Defense of Payday Loans – Reason TV

This piece entitled, “In Defense of Payday Loans” is a little dated but still worth a look. Most payday loan operators are focused 100%  on running their lending businesses so we have little time left for developing Youtube videos, writing letters to the editor of our local papers, etc. And regarding customer testimonials, few of our clients are willing to come forward because of their embarrassment at having to use our product.  The reality is there are few complaints by anyone other than our competitors (banks, credit unions, credit card companies, pawn shop owners, rent-a-center (RAC) operators…) and the so-called consumer advocates who haven’t a clue.


Payday Loan Marketing Idea

payday loan marketing graphic wrapThis picture says it all! This “graphic wrap” for your business is a no-brainer. Drive it… move it… park it… better than signage. It certainly can compensate for a poor location! Budget $2500 depending on your locale. Email us for your local installer.

Need know-how? Want to start a payday loan business? Sign up for our Payday Loan Boot Camp Click here to join us for an intensive 2-day Boot Camp in our “LIVE” Store in Southern California (near Disneyland).

Are you thinking about getting into the Payday Loan business? Do you want to really know the in’s and outs of owning a payday Loan company? Reading a Manual is one thing, but actually performing the daily task of owning and operating a payday loan company is a whole different beast. A Payday Loan Manual cannot answer specific questions that arrive after just reading it. So stop reading and start doing!!

Come to our Payday Loan Boot Camp and experience the actual day to day operations in a live store to see if this business is right for you!!

We will show you how to:

  • Get a customer and exactly what to do when your first customer arrives.
  • How to qualify and process a Payday loan candidate.
  • How to collect once you have your first customer.
  • We will enable you log into our software and teach you step by step the process of writing a payday loan.
  • We will answer all of your questions at that very moment to end any speculation that may occur.
  • We will show you exactly how to organize you office to handle your daily tasks.
  • What to do if a loan goes bad.

So, stop guessing how this business works and come learn on the job!! Our boot camp will save you a tremendous amount of time and money. When you leave our payday loan store, you will have the tools and experience needed to start a payday loan business!!

Click here for Schedules and Pricing Information
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Trihouse Consulting PaydayManual.com


Payday Loan Industry-Opportunities, Challenges and Respect

Jer here. My rant today targets the multitude of opportunities in the payday loan space.

Capital is simply a commodity! Ask what your financier brings to the table in addition to dollars.

This isn’t a short analysis. You want superficial B.S? Click away now . Pay the price, invest 5 minutes of your time and THINK.

There are serious disturbances occurring today. Worldwide consumer demand, technology, regulatory oversight, extraordinary availability of capital, disclosure and cycle-of-debt issues…

What does all this really mean? There has never been more opportunity in our space than today. Sure, there are challenges.


Customers all over the world – by the millions – want our product.

What’s this mean to you? How do you want to get involved?

Do you want to partner? Are you an Investor? A Lender? Have capital? Need capital? Got an idea? Are you a vendor? A seller? Want to sell your stores? Your Internet operation? Sell your portfolio?

LET ME KNOW! I’M BOMBARDED DAILY by Lenders, Operators, Investors, Buyers, VC’s, Hedge Funds and Entrepreneurs! Let’s explore together…

Here are a few in no particular order:

  • Serious $$ ($2M-$10M+) needs placement. Very smart, experienced operators are in demand! The financiers need YOU! ROI? Depends on the “deal,” the structure, the Team, the terms,the exit strategy…
  • Capital looking for opportunities. Know anyone with a SOLID team in place, not a start-up, already have substantial “skin in the game ($$) who needs capital $2M+ for funding PDL’s (no infrastructure build-out, no operations expenses to be paid with a new capital infusion), probably earn 2% – 5%/month or more depending on the deal/structure/equity?
  •  Brick-n-mortar buyers with cash! Want to sell? Fast?
  •  Internet biz buyers. Want to sell your Internet Biz/Portfolio?
  • Investors: 3rd Party Lenders in Texas! Huge demand due to disclosure requirement of Third Party Lender on new CAB License as of January 1st, 2012. Fully collateralized, 15-20% annual ROI is typical. Secondary challenge is the $25k net asset requirement per location – operators need help with this kind of operating capital too. There are over 3,500 Texas CSO’s and Texas is blowing up with business
  • Operator with 10 years+ experience, started Brick-n-mortar, now have $150K on the street via Internet. Looking for $100K – $500K in tranches strictly for funding PDL’s via the Internet. Strong Team!. Couple of state licenses currently..Ready to rock-n-roll!
  • So. California stores for sale.
  • Mississippi stores for sale
  •  Missouri stores for sale
  • Several other states with stores for sale
  • We have a “ton” of small, very experienced Lenders in PDL or car title all over the USA looking for expansion capital. For example, very small car title Lender in TX, 15 years exp. looking for $50K for funding. These are not start-ups. They just can’t meet demand nor can they access the banks. Boatloads of this scenario! Beautiful, tightly run store winning system and making money.
  • Tribes need access to capital to launch PDL operations, casinos, check cashing stores, infrastructure, training and more.
  •  Exploring the tribal/sovereign nation model? Need help?
  • Are you a compliance pro? An “in-the-trenches collaborator” capable of working with “crazy” payday loan entrepreneurs?
  • Need help navigating the Texas CSO>CAB transition?
  • Are you a seasoned payday loan professional looking for new opportunities? Are you a Lender in need of experienced talent? Our industry in cranking! Complete privacy assured.
  • Analytic savants needed. Everyone is working on their “secret sauce.”
  • Plenty more all over the map but I gotta go row! Newport Beach is BEAUTIFUL today!

Look, my phone rings off the hook all day! Some days I’m on it non-stop. (Actually I have 2 cells, a notebook, a laptop, a desk top, and iPad and an iPod!).I’m buried with the daily dynamics and opportunities in Lending. Call me 702-208-6736. Send an email Jer@TrihouseConsulting.com with your ideas/needs.

And do your research! Get up to speed. Figure out what you want to do in this PDL game. It’s INTERNATIONAL! Visit the DFC Global web site and listen to their last 10K! Look-up Zest Cash, Wonga, DebtResolve… They’re all discussed on my Blog.


Finally: A RESPECTFUL, short comment about our industry by a Banker:



Just getting started? http://paydaymanual.com/cash-advance-store.html