Cash loans are usually needed by people who need quick access to cash, but who lack collateral, who do not have a verifiable credit history or who do not qualify for traditional forms of credit. In South Africa, there is a growing demand for such financial solutions.
The harsh economic environment and rising inflation are factors that are making it more challenging for individuals to make a comfortable living in the country. This has led to a greater reliance on personal loan solutions to help with day-to-day costs of living. The micro finance sector has grown significantly as a result.
When you start a cash loan business in South Africa, it will essentially operate the same way banks do. You will get people to invest and pay them interest. You will then lend out that money to people who ask for loans and charge interest for these loans.
The registration fee for establishing a micro lending institution is R2000 plus a R250 branch fee per location. You are able to download the application form via the National Credit Regulator website.
To register a micro finance company in South Africa, you need to be compliant with a number of regulations and regulatory bodies.
Registration is required with the Micro Regulatory Council and you need to operate under regulations of the Usury Exemption Notice of 1999 under these circumstances:
- Loans do not exceed R10 000
- Repayment period no longer than 36 months
- Loans not recovered from a credit card or cheque account
The National Credit Act regulates credit in South Africa. When new credit agreements are formed, there is a need to disclose interest rates, fees as well as any additional charges involved.
Tips:
- If you want to start s cash loan business in South Africa, you need to charge a fee for your services
- It’s best to have a professional office from which to operate
- It’s important to decide if you want to operate on a bigger or smaller scale