Free Payday Lender Business Plan
For Raising Capital from Investors, Banks, or Grant Companies!
Please note that the financials
in this complete free business plan are completely fictitious and may not
match the text of the business plan below. This free business plan demonstration
purposes only. If you are interested in purchasing the completed editable MS Word
and Excel documents for this business plan, please click the button below! Also,
the text of the business plan is formatted with a fully automated
table of contents.
It should be noted that there is no special software required to use these
templates. All business plans come in Microsoft Word and Microsoft Excel format.
Each business plan features:
- Excecutive Summary
- Company and Financing Summary
- Products and Services Overview
- Strategic Analysis with current research!
- Marketing Plan
- Personnel Plan
- 3 Year Advanced Financial Plan
- Expanded Financial Plan with Monthly Financials
- FREE 30 Page Sample Private Placement Memorandum
- FREE PowerPoint Presentation for Banks, Investors,
or Grant Companies!
- All plans are updated for 2013!
1.0 Executive Summary
The purpose of this business plan is to raise $125,000 for the development of a payday lender while showcasing the expected financials and operations over the next three years. Payday Loan Company, Inc. (“the Company”) is a New York based corporation that will provide short term high interest loans to customers in its targeted market. The Company was founded in John Doe.
1.1 Products and Services
The Company will provide payday loans to people that are living within the Company’s target market, and which it is authorized to do business. The market for these products is immensely large among lower income borrowers and the unbanked. Payday and signature loans are primarily designed as an emergency credit vehicle for limited usage. The Company will install several credit procedural methods to ensure that our high interest rates loans are provided in the ethical manner consistent with all state usury, lending and credit laws. The third section of the business plan will further describe the services offered by the Payday Loan Company.
1.2 The Financing
Mr. Doe is seeking to raise $125,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate.
1.3 Mission Statement
Payday Loan Company’s mission is to become the recognized leader in its targeted market for providing short term loans and lending services.
1.4 Mangement Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the retail management industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target lower income individuals within the target market.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Payday Loan Company, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Payday Loan Company requires $125,000 of debt funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of the Payday Loan Company, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Payday Loan Company. Based on historical numbers, the business could fetch a sales premium of up to 5 to 7 times earnings.
3.0 Products and Services
Payday loans are made for people that need fast access to capital. The Company allows borrowers that have employment for six months at the same location and an active checking to obtain small two week credit loans. Payday Loan Company, Inc. will use the automated clearing house system to ensure that on the date that the loan is due; the business can immediately withdraw funds on the date that the customer is paid. This will ensure that the client does not default on their loan. Customers will not be able to rollover their loans. By not allowing customers to roll over on loans, the Company will promote responsible usage of emergency credit lines for customers. Fees for a two week loan will equal 10% to 19% of the borrowed amount. The minimum loan will be $100 and the maximum loan offered by the business will be $1,000.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the payday loan industry, the customer profile, and the competition that the business will face as it progresses through its business operations. Currently, the economic market condition in the United States is in recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. Many economists expect that this recession will continue until mid-2010, at which point the economy will begin a prolonged recovery period. There are several pieces of legislation that are being considered on both the federal and state level that will sufficiently limit the interest rates charged to low income borrowers for emergency credit services. The payday, title, and signature loan industry generates interest rates of 100% to 600% (on an annual rate) to its customers. These businesses are able to charge these rates of interest as many states do not have upper limits on the interest rates charged on small loans.
4.2 Industry Analysis
In the United States there are over 60,000 businesses that operate as non-depository credit institutions. Among these businesses, an aggregates receipt over each of the last five years has been in excess of $229 billion dollars of interest revenue. These businesses employ over 500,000 people and provide gross annual payrolls in excess of $22 billion dollars. Approximately 5,000 of these businesses operate within a similar capacity as that of the Company. The industry has recently undergone a revolution with the advent of the Internet. With instant access to customer verification, people can seamlessly borrow capital from banks that conduct business on the Internet. This aspect of the industry is expected to grow at a rate of 10% per year for the next five years. The Company intends to capitalize on this trend.
4.3 Customer Profile
The Company will cater to a large audience of lower income people that have limited access to banking services and/or credit. The Company is quickly developing its credit manual to develop guidelines regarding its payday and signature loan business. The business has already employed several techniques to ensure that credit default is kept to an absolute minimum. In regards to the Company’s lending services, the business will require authorization to debit the customer’s account on the day that the loan becomes due.
4.4 Competitive Analysis
This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition.
5.0 Marketing Plan
The Payday Loan Company intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Company.
5.1 Marketing Objectives
• Establish relationships with check cashing locations that do not offer payday loan services within the targeted market.
• Implement a local campaign with the Company’s targeted market via the use of flyers, local newspaper advertisements, and word of mouth advertising.
• Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
5.2 Marketing Strategies
Mr. Doe intends on using a number of marketing strategies that will allow the Payday Loan Company to easily target men and women within the target market. These strategies include traditional print advertisements and ads placed on search engines on the Internet. Below is a description of how the business intends to market its services to the general public. The Payday Loan Company will also use an internet based strategy. This is very important as many people seeking local services, such as payday lenders, now the Internet to conduct their preliminary searches. Mr. Doe will register the Payday Loan Company with online portals so that potential customers can easily reach the business. The Company will also develop its own online website, which may include functionality for allowing customers to directly acquire loans over the internet. The Company will maintain a sizable amount of print and traditional advertising methods within local markets to promote the payday loans that the Company is offering.
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
6.3 Management Biographies
In this section of the business plan, you should write a two to four paragraph biography
about your work experience, your education, and your skill set. For each owner or
key employee, you should provide a brief biography in this section.
7.0 Financial Plan
7.1 Underlying Assumptions
• Payday Loan Company, Inc. will have an annual revenue growth rate of 13% per year.
• The Owner will acquire $125,000 of debt funds to develop the business.
• The loan will have a 10 year term with a 9% interest rate.
7.2 Sensitivity Analysis
The businesses’ revenues are not sensitive to the overall change in the general economic market. Payday and signature loans are primarily used as emergency lending vehicles, and as such, the people obtaining these loans are in a serious financial situation. As such, as the economy recesses the business may actually notice a marked increase in the business generated by the Company. However, severe turns in economic stability may increase the defaults experienced by the business. Management would compensate this higher risk by increasing the fees associated with each loan.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statements
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 General Assumptions
7.9 Business Ratios
Expanded Profit and Loss Statements
Expanded Cash Flow Analysis