A discussion on starting a business

By Richard Harroch In:

A discussion on starting a business

This is the lending out of small amounts of cash, usually without collateral. The concept has been adopted successfully by both profit and non-profit organizations, especially cooperatives.

Millions of people have benefited from access to the loans provided by micro lending companies.

A discussion on starting a business

Micro lending has caught on even with banks and other financial institutions that previously thought it was not feasible. It turned out that most of the small time borrowers were also good payers, and since the interest rates were higher than the usual mark-up of banks or financing companies, the practice became attractive to the large lenders.

For entrepreneurs who wish to go into this promising business, there many things to learn to be successful.

A discussion on starting a business

Here are some pointers for those who plan to put up their own microlending business: For practical reasons, it is usually best to be located near your target market. Security must also be a consideration because you will be handling cash, so being near a bank would lessen the risk of robbery in transit.

Cooperatives, however, are registered with the Cooperative Development Authority. The current law does not allow sole proprietorships or partnerships to go into the money lending business.

There must be a minimum paid up capital of P1 million. In actual practice, how you allocate your capital will affect the viability of the business. Conserve on expenses like renovation and expensive furnishings, as this will allow you to have more funds available for lending out.

You must know and comply with the laws pertaining to the micro lending business.

Starting a Pilates Business with Cara Reeser - Discussion

The most important is the Lending Company Regulation Act of To be able to apply this, you must also read the implementing rules and regulations of the laws. This is important so that your customers will be billed correctly and you get the right margin.

Proper documentation of the loan is critical later on when you have to take legal action in order to collect. The best way to reduce losses due to bad debts is to avoid poor payers in the first place. To do this, there must be a thorough credit investigation to assess character.

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Collateral must be treated only as a secondary remedy because of the long and difficult process of foreclosing. To minimize your collection expenses, you should pursue bad debtors in the small claims court.

This court will save you money in legal expenses because lawyers are not allowed in the proceedings. However, the court will only hear cases if the original principal amounts to not more than P,; but almost all loans in micro lending are below that amount anyway. There will always be a big demand for small loans, and the micro lending entrepreneur is well placed to cater this need.

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This discussion with Cara Reeser, a successful and well-known Pilates studio owner, is for those interested in starting their own Pilates studio business, or for those who are simply curious about how Pilates businesses get started.

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