How to Start A Cash Loan Business in Namibia

What is a cash loan business?

Cash loan businesses operate in a similar way to banks. Banks however have a ceiling on the amount of interest which can be charged to consumers (stipulated by the Usury Act). All micro lenders must register with the MFRC (Micro Finance Regulatory Council) before commencing operations.

Where and how to start a cash loan business in Namibia

These are the best way to start a cash loan business;

• Plan your business.
• Form a legal entity.
• Register for taxes.
• Open a business bank account & credit card.
• Set up business accounting.
• Obtain necessary permits and licenses.
• Get business insurance.
• Define your brand
• Create your business website
• Set up your business phone system

Frequently Asked Questions

What is a cash loan business in Namibia?

Cash loan businesses operate in a similar way to banks. Banks however have a ceiling on the amount of interest which can be charged to consumers (stipulated by the Usury Act). All micro lenders must register with the MFRC (Micro Finance Regulatory Council) before commencing operations.

How do I become a microlender in Namibia?

To become a microlender, you can lend a small amount through a non-profit organization using a valid credit card and a PayPal account. Research organizations online that provide safe and effective microlending opportunities. Select and register with the appropriate organization.

How much does it cost to start a finance company in Namibia?

What are the costs involved in opening a financial planning firm? Starting a firm requires you to become a registered investment advisor (RIA), registered with your state. You will spend between $10,000 and $20,000 for basic startup costs.

Is money lending business profitable in Namibia?

Money lending, hence has always been and will be one of the most lucrative business. The modern day formal financial systems that include banks and NBFCs have made a dent to the profession of money lending by bringing rates down, but these institutes also make handsome money on the loans they give out.

How do finance companies make money in Namibia?

Finance companies make a profit from the interest rates (the fees charged for the use of borrowed money) they charge on their loans, which are normally higher than the interest rates that banks charge their clients.

Can I lend money with interest in Namibia?

Can I lend money to a friend and charge interest? Yes, you can, but the tax ramifications can be tricky and complicated. You would have made interest on the money if you had kept it an interest-bearing account, and that’s one good reason to charge interest.

Can I lend money with interest in Namibia?

Can I lend money to a friend and charge interest? Yes, you can, but the tax ramifications can be tricky and complicated. You would have made interest on the money if you had kept it an interest-bearing account, and that’s one good reason to charge interest.

Can you loan someone money without tax implications in Namibia?

Nothing in the tax law prevents you from making loans to family members (or unrelated people for that matter). However, unless you charge what the IRS considers an “adequate” interest rate, the so-called below-market loan rules come into play. As the lender, you simply report as taxable income the interest you receive.

Is it smart to start a business on a loan in Namibia?

Obtaining a loan to start an unproven business is indeed a bad idea. Obtaining a loan to start a franchise location usually is a good idea. A business loan will often have worse terms and require lots of paperwork. Functionally, a business credit card is a form of a loan.

How do I start an online loan business in Namibia?

The first thing you need to do is a strong Business Plan including a list of the assets and data on the prospective payday loan clients. It includes a detailed marketing plan that attracts the customer with telephone book advertising, vibrating signage, direct mail and networking with others financial institution.

How do I register a micro business loan in Namibia?

To register a new micro finance company a non-refundable application fee of R500 is needed as well as a R250 branch fee per location. Application forms and all relevant regulations can be easily downloaded from the NCR website or you can download the forms below: Application for registration as a credit provider.

How do microloans help the poor in Namibia?

The idea was simple enough: By giving a very small loan to someone living in a poor country, you could help them expand a small business, which would lift their family out of poverty. When they pay back the loan, the money can be cycled to more borrowers, getting more families out of poverty.

What’s considered a micro loan in Namibia?

Microloans are normally defined as any loan for $50,000 or less. Since many banks are unwilling to provide smaller loan amounts, microloans are a great way for business owners to get access to capital.

What can a micro loan be used for in Namibia?

Microloans can be used for the same things as any type of business loan including payroll, inventory, equipment, furniture, fixtures, and machinery.

Why do people apply for micro loans in Namibia?

Microlending is a financial innovation made possible by technology and the peer-to-peer economy. People looking to lend money to earn potentially high returns may fund borrowers who either have no access to credit due to geography or cannot get credit from traditional sources, such as banks or credit unions.

How do I become a microloan lender in Namibia?

• Be a private nonprofit, quasi-public, or tribally-owned entity.
• Have at least one year of experience directly issuing and servicing microloans.
• Have at least one year of experience providing in-house marketing, management, and technical assistance to its micro-level borrowers.

Do banks give loans to start a business in Namibia?

As I explained above, banks do lend money to startups. One exception to the rule is that the federal Small Business Administration (SBA) has programs that guarantee some portion of startup costs for new businesses so banks can lend them money with the government, reducing the banks’ risk.

Is it hard to get a loan to start a business Namibia?

It is difficult to qualify for a small business loan with a credit score lower than 700. “Most loans require some form of down payment, and this is typically varied based upon the borrower’s financial history and the collateral put up for the loan,” Weitz added.

How difficult is it to get a startup business loan in Namibia?

It is very difficult for a new business to get a loan from a commercial bank or lender for business startup. New businesses are in fact the riskiest loans of any that a bank or lender might encounter.

Can I get a business loan with no income in Namibia?

Borrowers can get a business loan if they are unemployed but there are multiple facets impacting their chances of approval. “If you can convince them you’ll have no problems repaying the loan regardless of your employment, then you’ll have a higher chance of getting funding.”