Microfinance organization business plan
Analysts claim that by the end of the same year, its value will rise to 56 billion. Statisticians have calculated that a start-up package for microloans pays off to the population in just 1-2 months.
Offices where you can borrow a small amount grow in big cities even faster than mushrooms after a warm summer rain. But, as in any private business, an entrepreneur must be ready to fulfill as accurately as possible the requirements for businessmen of this kind. To begin with, a person who is going to make money on microloans must answer himself a few questions.
- Will the chosen business be competitive? (Microloans today are issued by hundreds of entrepreneurs).
- Is the founder ready to thoroughly follow the requirements of the law?
- Is he willing to incur losses if some of the loans are not returned?
- How much money is he willing to invest in opening a business?
Having understood the answers and having read Art. Federal Law of the Russian Federation N 151-FZ dated 02. 7. 010, the entrepreneur is ready to start registering a legal entity. This could be a foundation, partnership, LLC, or other type of out-of-budget nonprofit partnership organization.
How to open a microloan company?
Starting a business is not much different from organizing any other business of your own and starts with paperwork. The entrepreneur must study the governing documents, collect a package of necessary papers, rent a room that meets the requirements of Rospotrebnadzor and the fire inspection.
There is only one difference: a company carrying out a microloan of money must be registered in the State Register of Microfinance Organizations without fail. Otherwise, its activities will be illegal. A number of documents are required for an activity permit.
- Application of the owner (with all his contact and passport data) on the entry of the company (firm, organization) into the Register of Microfinance Organizations.
- Registration (copy) of a legal entity.
- Information about the founders. Typically, a sample of this document is posted on the websites of city administrations. Depending on the city, the forms may differ slightly.
- Decision (copy) on the election of the governing bodies of the organization. It is compiled in any form.
- Standard package of documents: certificate of state registration of the company, Charter, constituent documents. The Articles of Association must necessarily indicate that one of the company's activities is the issuance of loans.
- Documents confirming the legal and actual address of the organization.
Some tips for beginners
The service is in demand among segments of the population with below average income. Most often, these loans are taken for urgent needs "to paycheck." The main competitive advantage over pawnshops and traditional bank lending is the availability of such a loan under two or even one document without collateral. However, low requirements for borrowers give rise to a high rate of defaults. Profit is formed at the expense of lending interest, which is usually calculated on a daily basis. In terms of annual, hundreds of percent are obtained.
As a rule, these are several categories of citizens with below average income: employees of budgetary organizations, young people, single mothers. A small percentage of clients of microfinance institutions are also people with higher income.
The level of competition can be assessed as average. Players appear, working on a network principle throughout the country. To open a microfinance organization, we recommend that you consider buying a franchise.
Formally, a microcredit organization can legally operate without an office. But if we are talking about creating a brand recognizable in a city or region, then it is advisable to acquire a room. The office of a small company for issuing short-term loans can be located on an area of about 20 sq. ... The structure of the room can be as follows:
Monthly rental price: 25-30 thousand rubles. (Moscow), 15-20 thousand (regions). Investments are to be made in repairs for the brand design: 300 thousand rubles. Total expenses for premises in the first year of business: 600-650 thousand (Moscow), 480-550 thousand (regions).
It won't be a revelation if we say that the financial condition of most of the population is far from stable. Therefore, in recent years, the number of organizations involved in issuing loans to the population has sharply increased. If only five or six years ago it was exclusively the prerogative of banks, today the situation is exactly the opposite.
Often people prefer to borrow money from MFIs, since they do not require a whole bunch of documents.
In a word, today we will consider the simplest business plan of a microfinance organization. If you have the funds for the initial start, then the prospects are quite decent.
In general, the prospects for the development of this kind of business are very optimistic. In 2021 alone, its turnover increased by 50%, and at the end of 2021 - by 60%. The total volume of the loan market is estimated by experts at more than 60 billion rubles annually.
What laws govern the activities of such organizations?
For their regulation, the Government of the Russian Federation adopted a special Federal Law “On Microfinance Organizations”. The law says that an entrepreneur, guided by a loan agreement, can give a client up to one million rubles inclusive.
Please note: this contract is fully regulated by the provisions of the Civil Code of the Russian Federation. When writing a business plan for a microfinance organization, be sure to familiarize yourself with its provisions in this area.
In principle, there are no tangible obstacles to organizing this kind of business.
Just note that the most suitable organizational and legal form of ownership will be LLC. Of course, an individual entrepreneur is also suitable, but in light of the fact that the amount of income can significantly exceed the level to which you can count on simplified taxation schemes, there will not be much benefit from this.
Important! There is a unified Federal Register of Microfinance Organizations, in which your company must be registered. Please note that if this condition is not met, all your activities will be completely illegal.
Previously, many people did not trust MFIs that issue instant loans without refusals, preferring to contact banks. But now this area has justified itself and is actively developing. Therefore, a business on it will be profitable. How to open microloans from scratch? All the nuances of business organization are presented in the article.
The microloan business idea has several features that distinguish it from consumer lending at a bank. This area has high prospects in the Russian market. This explains the marked increase in the number of MFIs.
But to open a microloan business, which will bring high profits and will be in demand, you need to analyze a lot of information and take into account important aspects. This applies to both the name and the algorithm of work, the location of the company.
First you need to familiarize yourself with the terminology and definitions. In Russia, Federal Law No. 151 dated 02. 7. 010 "On Microfinance Activities and Microfinance Organizations" was adopted, which defined the work of private lenders and small companies that issue loans for a short time. Now these services are controlled by uniform rules. Microloans include loans of up to 1 million rubles.
To be able to issue loans to individuals, the company must be registered as a legal entity. All firms operating in the country must be included in the state register, where their details are indicated.
Difference from bank lending
At first glance, it may seem that the work of an MFI is almost the same as that of a bank. But if you deal with all the subtleties, you will find differences:
- Microloans are issued only in Russian rubles.
- The MFI has no legal right to unilaterally amend the terms of the agreement.
- The company cannot charge fines for early payment, but only on condition that the client has notified this intention in advance.
- The MFI does not have access and the right to conduct operations in the stock market.
- Minimum requirements are imposed on borrowers.
Franchise or your own business?
How to open microloans from scratch? There are 2 ways to start a business:
- Use the advertised name of companies offering franchise work.
- Open your MFI.
It is important to familiarize yourself with each method in detail. The first option is simpler and does not require large investments. But the terms of the franchise are different in each. Some provide support, software, training, while others are limited to small participation. But due to the simplicity, the income is usually less. Typically, new entrants pay their work fees using the promoted brand name.
Microcredit services are rapidly gaining popularity among the population of the country. So why not think about how to start a microfinance organization from scratch and get good money every month?
Types of MFOs
A simplified microfinance system unites all such organizations. Microfinance organizations can be divided into the following types:
- Financial group.
- Credit cooperative.
- Credit society.
- Credit agency.
- Credit union.
- Entrepreneurship Support Fund.
Some companies are subsidiaries of banking institutions. For banks, the presence of MFOs and the provision of microloans at a higher interest rate is very profitable, but there are also risks of non-repayment of microloans.
The first main difference between an MFI and a bank is that this company can be opened from scratch using step-by-step instructions. Other differences between an MFI and a bank:
- You can apply for a loan only in national currency.
- IFC have no right to impose fines, penalties on a debtor who has decided ahead of schedule to pay off his debt in whole or in part upon timely notification.
- A private organization cannot change the terms of the agreement, including the size of the loan rate, commission, specifics of the definition of obligations under the contract, or the time of their action unilaterally.
- There are simply no microfinance organizations on the securities market.
- Microfinance companies are ready to demand less from their clients in relation to the documents presented, however, they also provide smaller amounts of microloans.
Why are such institutions in demand?
The demand for such institutions is explained by their main advantages:
- Lack of strict state control over the activities and issuance of microloans.
- Simplified process of registration of a legal entity, no need for licensing.
- There are no clear requirements for the amount of equity capital.
- There is no need for required reserves.
- There is no need to make insurance charges to funds.
- Rational control levers and soft financial performance.