With stricter lending criteria coming into place and a boom in digital technology, the UK is experiencing a huge demand within the loans industry – many now looking to apply for a loan online.
Lending giants such as Wonga, QuickQuid and more have recently fallen into administration with a surge in compensation claims, leaving in their wake a demand for loans that entrepreneurs are keen to cater to.
But how do you set up a loan company? What are some of the key factors to consider? Here, Lending Expert takes a look at some important factors entrepreneurs must pay attention to when deciding to set up a loans company.
So, How Do I Start My Own Loan Company?
Regardless of the type of loan you’re offering, below are some of the main factors to consider when wanting to start up your own loan company:
Find and Establish Your USP
What’s going to make you stand out from other lenders? When setting up any type of business, it’s important to establish your unique selling point (or USP for short). Your USP is something that can draw customers to your services over your competitors. Some key questions to consider can be:
- What types of loans will I offer?
- Will these be available for those with all credit histories?
- Will I specialise in a certain type of loan?
- Will I offer competitive APR?
What you decide your offering to be can have a huge impact on how big your market will be, the marketing material you use and the growth you could potentially see.
Find the Right Branding
Finding the right branding for your loan company is another important factor to consider; helping you to reflect the correct image for your business, and thereby attract the right customers.
When deciding on branding, you’ll want to pick a name and an image that’s eye-catching but helps people take the business seriously.
Some loan companies will use an aesthetically pleasing colour scheme with a calm backdrop image (popular backdrops including the ocean, a sunset or clouds). Many companies will do this to try and put customers at ease and help to create an enjoyable interaction and experience with their brand.
Create a Website
If you’re wanting to set up an online loan company, you’ll need to create a good website to attract online customers.
Your website should be user-friendly, aesthetically pleasing, and encourage users to engage with your business, either through enquiries, applying for a quote or giving them the option to apply for the loans you’re offering.
When setting up an online business of this nature, it’s also important to pay attention to your SEO, helping to boost your online presence to the customers wanting what you’re offering.
Underwriting refers to the process lenders take in deciding whether to approve a loan application.
Underwriters are necessary to oversee this process, using their analytical skills to review applications efficiently and consistently. Some lenders will have loans decided by an underwriter manually, or via an algorithm they oversee.
Make Sure Everything’s Legal
The most important factor to consider when setting up a loan company is that you are operating legally, and have authorisation to conduct your business from the appropriate governing bodies.
There are many guidelines loan companies must abide by in order to operate in the UK, promoting responsible lending practices as well as treating customers with care and fairness.
You will most likely have to get involved with the FCA (Financial Conduct Authority) – the UK’s financial watchdog and main regulator for UK loans.
While all of the above factors to consider when starting up a loans company are important, they do not make up the full picture of becoming a lender or starting up a loan company. It’s important to make sure you have covered all bases when it comes to creating any type of business, and as usual, pay extra attention to the legalities that govern your industry and therefore your business operations.