How to Start a Finance Company

A business financial company provides loans for commercial, consumer or business purposes. If you are interested in starting your own company, here are the steps to follow when you want to know how to start a finance company.



Steps
1. Create your finance business plan.

• Outline your plan for your business. Write down how you plan to operate and how you will get additional financing. You may have to provide a plan to your state's licensing department in order for them to approve your business license. You will want to include what types of loans you plan to offer and what type of clients you are marketing to.

2. Establish your company as its own business entity.

• A finance company should be set up to be separate from its owner. In the event that your company has some financial difficulties or something goes wrong with a client, creditors cannot come after your personal assets if the business is a separate entity. Legally they will have to go after the business and its assets. Check with your secretary of state for the necessary paperwork to establish your company as a business entity.

3. Get financing for your business loan.

• You may need extra financing to get your business running. You will have to submit proof of your income to your state's financial agency to prove that you can lend money. If you have partners, you should submit the figures for you and all your partners.

4. Pay for all licensing fees.

• Each state will have its own fees so the amount will vary depending on where you live. On average, expect the fees to cost $1,000 or more. You will also have to pay the state a security bond. This works as a guarantee that you have the money to lend to clients. This fee will be higher, somewhere between $50,000 and $100,000. The final amount will depend on the type of business you have. Lastly, you will also have to pay investigations fees to the state. This will cover the investigation done by the state to ensure that you are legitimate and not involved in fraudulent practices. This fee will be about $1,500.

5. Create loan packages that you will be offering your clients.

• Considering the types of clients and money figures you plan to deal with, make up loan packaging to show your clients. Cater these packages to your clients and what they are looking for and can afford.