For centuries, enterprising people have been trying to earn money by giving out money at interest – forcing them to work not with people, but with their own capital. Yes, they are treated differently. Someone quietly hates the lenders, considering them immoral, profiting from other people’s problems.
In today’s world, it would seem, there is no need to turn to the private sector for money, because literally on every corner there is a bank, if not one. But the situations are different, and for many it is still easier to borrow the “ten” before the salary without much delay than to collect certificates and write an application to the bank for a long-term loan.
These strange letters are MFIs
According to the law, apart from banks, pawnshops and various specialized cooperatives, short-term lending can now also be done by MFIs – microfinance organizations. In fact, they are not so “micro” – they are allowed to lend up to a million rubles.
In order for a legal entity to become not just an organization, but a microfinance organization, it needs to lend to its clients on a permanent basis, not occasionally, to receive a systematic income from such activities, and to be included in the state register of MFIs.
How do I register an MFI?
First of all, it is necessary to create a legal entity, and not in any form – only foundations, ANOs (autonomous non-commercial organizations), non-commercial partnerships, institutions (except for public ones), business companies (including LLCs) or partnerships can register as MFIs.
In order to be included in the state register, an MFI must be submitted to the registration authority:
- A statement;
- Copies of the founding documents of the organization;
- Copies of decisions on the establishment of the organization and approval of its constituent documents;
- Copies of decisions on the election (approval) of the management bodies of the organization and their personal composition;
- Information on the permanent location of the executive body of the organization and its contact information;
- Extract from the Register of foreign legal entities, if any, among the founders.
Before the first loan.
In order to get started, it is necessary to develop the procedure and conditions for granting microloans, and to ensure free access to these documents for all those wishing to do so. To do this, it is absolutely enough to place these conditions on any Internet resource (it does not even have to be the company’s website), and then refer to it. And that’s it, paper and legal training ends here, and the organizational training begins.
Loans need to be issued somewhere – you can not do it in a cafe or at a stop. For an office it is enough to rent a small room of up to 10 square meters, but it is important that it is located in a crowded place.
Staff costs are optional: you can also work independently until the first income. But also we will not hire one employee will not ruin anybody – to pay its work it is possible already with the percent received for use of loans.
Gradually it is possible to expand the staff and number of offices, but here everything depends on the ambitions of the owner. It is not necessary to open several offices at once, without having sufficient resources for this: because of the uncounted scale and not long to go bankrupt, and examples of this – a lot.
The situation is more difficult with advertising: in many cities it is not cheap. But even here it is possible to connect ingenuity, and to meet the minimum budget. For example, common and cheap advertising MFI are banal ads on poles, stops and bulletin boards (at the entrances and even on the Internet).
Reporting, checks and commitments
Microfinance organizations, as well as any other legal entities, are obliged to keep records of their activities and report on them in a timely manner. An MFI does not have the right to keep simplified accounting, so a good accountant will necessarily be needed.
In order to minimize expenses, it makes sense to think not about hiring a specialist on the staff, but about concluding a contract with a specialized organization – it is cheaper and easier, and with a guarantee of quality.
What to do with debtors?
Founders and owners of microfinance organizations put their risks in high interest rates on loans. This is easier than “knocking out” debts, especially since the 90’s are, fortunately, long gone.
But nobody forbids MFIs to sue debtors, contract or sell debt to collection agencies. The latter is not the most profitable option (you can get only up to 3% of the principal debt), but you can save yourself the headache of searching for unwilling citizens.
How much can you earn?
It is no secret that the microfinance market is a very profitable niche for business. It is obvious even by the number of such organizations – if such activities did not bring income, MFIs would not grow like mushrooms after the rain.
On average, the profit is about 20% per month, but everyone should evaluate independently both the risks of non-repayments and their ability to compete with other similar organizations. Every tenth registered MFI does not give out any loans at all, having failed to cope with advertising! Therefore, people who are inexperienced and unpunctuated in this business will have to be very tight.
If the prospects of significant earnings still outweigh, then perhaps beginners should not get involved in the creation of their own MFI, and try their hand at a large team, buying a franchise of one of the many already today MFI-networks. Having gained experience, it is already possible to start in free navigation of the immense ocean of usury. Seven feet under the keel!