Are you looking for a way to make money? Do you want to start your own lending business in Ghana but don’t know how to get started? You’re in luck!
This blog post will help give you the information that you need.
We will explore what it takes, before getting into the steps involved with starting a new lending company from scratch.
In this blog post, you’ll learn:
- What lenders do
- The different lending business models available to choose from -Whether a franchise is right for your needs or if you should go it alone.
- How much money does it take to start a new small business? What kind of loans will be required?
- The costs involved with starting a new lending company.
You’ll also learn about:
- The different kinds of services that lenders provide like small loans, mortgage refinancing, commercial lending, and more!
- What type of equipment is necessary? What do I need in order to start this kind of business? How much does it cost? And most importantly – when can I get started?!
Now you have got everything you need to know if you want to be an entrepreneur who starts their own business from scratch. This blog post is full of practical information on how to go about doing just that. Enjoy!
What lenders in Ghana do
Lenders provide loans to customers who need them.
There are various types of lending businesses, including mortgage refinancing and small business lending in Ghana.
The different kinds of services that lenders provide like small loans, mortgage refinancing, commercial lending, and more!
Some companies offer only one service (such as payday loan providers), while others may offer many related services such as car title loans or pawnshop operations.
You will likely find it most profitable if you decide which type(s) of lent products you want to specialize in when setting up your new business.
What type of equipment is necessary?
What do I need in order to start this kind of business?
Could you please provide information on the cost and start date of this service?
In addition to a strong work ethic, there are some requirements that you’ll need before starting your new lending company from scratch:
- A good understanding of the industry (through research or experience)
- Business plan
- Money for startup costs (such as renting office space, hiring staff, obtaining licenses/insurance). You may also want to create a marketing budget if you haven’t already done so.
Let us look at each in detail.
So, to start a money lending business in Ghana, you need to meet the following legal requirements:
- Obtain a license from the Bank of Ghana.
- Register your business with the Registrar-General’s Department.
- Comply with all applicable laws and regulations, including the Borrowers and Lenders Act 2020 (Act 1052).
- Maintain adequate capital and liquidity.
- Keep proper records of all transactions.
- Dispose of all monies received in a timely manner.
- Provide clear and accurate information to borrowers.
- Operate in a fair and responsible manner.
You can find more information on the Bank of Ghana’s website.
Read also: Money Lending Business Requirements in Ghana
a). A good understanding of the industry (through research or experience)
There are many different industries out there, and lending is no exception.
Before jumping into your new business venture you are going to need a strong work ethic, but also some knowledge about what it takes to start a small lending company from scratch.
It’s important that you find an industry in which you feel confident and knowledgeable enough to be successful so that this doesn’t become too much for you.
Conducting research in the field can provide valuable insight into the loan approval process and other important factors, such as the need to hire staff on the first day to ensure success.
Remember – choosing something easy isn’t always wise when starting off because everything needs time before growing more profitable!
b). Business plan
Many new entrepreneurs will feel that a business plan is not necessary.
However, this couldn’t be further from the truth – having an in-depth understanding of your company’s goals and objectives and how to achieve them are vital before you start any kind of small lending company!
It’s crucial for you to establish a plan in advance, so that the startup process can proceed without any hindrances caused by a multitude of inquiries and uncertainties.
A good rule is five years or more worth of plans at minimum.
The best way to do this is through research on what other companies have done along with talking to professionals like bankers or lawyers who could help you out if need be!
It will also teach you about potential risks and rewards associated with your company’s future.
c). Money for startup costs (such as renting office space, hiring staff)
To start a lending business in Ghana, you need funding.
The cost of starting a small lending company will vary depending on what you’re looking at and how much money is required to start it up.
The best thing to do is get some professional advice about this so that not too many mistakes are made in the initial phase!
Money may be needed for things like getting licenses/insurance or maybe you’ll need an expensive piece of equipment if you specialize in certain services such as car title loans or pawnshop operations.
Proper business planning can help provide insight into these issues and make sure there isn’t any lack of foresight when it comes time to actually functioning due to missing funds – which is the last thing you want!
Minimum capital requirement for savings and loans in Ghana
What is the minimum capital requirement for savings and loans in Ghana?
The minimum capital requirement for savings and loans in Ghana is GH¢15 million. This was revised upwards from GH¢7 million in 2018. The Bank of Ghana (BoG) announced the increase in minimum capital requirement for savings and loans companies (S&Ls) and finance houses in a bid to strengthen the financial sector and protect depositors.
The new capital requirement came into effect on January 1, 2019. S&Ls and finance houses that were unable to meet the new capital requirement were given a grace period of six months to comply. After the grace period, the BoG revoked the licenses of 23 S&Ls and finance houses that were unable to meet the new capital requirement.
The Bank of Ghana (BoG) conducts periodic reviews of the minimum capital requirement for savings and loans. A review was conducted in 2022, and it is expected that the Board of Governors will perform another review soon.
Here is a table of the minimum capital requirements for different types of financial institutions in Ghana:
|Type of Institution||Minimum Capital Requirement|
|Commercial Banks||GH¢400 million|
|Savings and Loans Companies||GH¢15 million|
|Finance Houses||GH¢15 million|
|Rural and Community Banks||GH¢1 million|
|Microfinance Institutions||GH¢2 million|
d). Marketing budget
If you don’t already have one, it is important that you make plans for your company’s future.
The best way to do this is by creating a marketing budget so that as soon as you start up people will know about what business-related services they can get from someone like yourself or whoever else in the industry.
This includes things like advertisements, pamphlets/brochures, and more – all with the goal of letting potential customers know who you are and where they can find out more information about how lending works along with obtaining any necessary loans themselves!
Different lending business models available
a). A small company that focuses on one type of lending (ex. loans, title, or pawn)
b). An individual who specializes in a specific service for all types of lending needs (ex. credit repair services).
In this case, you would be the best person to help with any kind of financial troubles because you know what it’s like to go through these problems and have been there before!
This could also mean being an accountant if people need accounting advice as well as someone who is knowledgeable about taxes or law enforcement issues – something else related to their field so they can provide comfort and trustworthiness when working with clients.
Each model has it is own pros/cons but at the end of the day, your choice should depend on why you are interested in starting a small lending company which is likely due to your passion for it!
What types of loans should you offer?
There are several types of loans you can offer in your lending business in Ghana.
When people think about obtaining a loan, they might automatically assume that’s all they can do.
However, this couldn’t be further from the truth with different types of loans out there – some are very specific while others may have more general goals/purposes like getting someone back on their feet after an unexpected financial crisis.
It will depend at least partly on what you’re looking for but don’t forget that even if you specialize in one type of service there will still be other avenues open to you depending on what kind of business model suits you best.
- Short term loans
- Personal finances advice is available for people who need it and want to improve their credit score
Most small lending companies in Ghana will operate on at least two of these aspects but the most important thing is that you are happy with what you do because this could be a business venture that lasts decades or even centuries!
It will depend heavily on your industry and where the future takes you.
For now, remember not to get too caught up in anything other than just getting started which means being mindful about how much money has been spent so far as well as making sure marketing strategies are already in place before opening up shop – without those things there may not be any customers coming through your doors anytime soon!
Tools you will need to run a lending business in Ghana
To run your lending business in Ghana smoothly, you will need to automate most of the processes.
How would you love to run and oversee all the operations under a single dashboard?
Well, you can thanks to Jisort Lending Engine.
Jisort is handsfree is software that assists in the management of accounts for companies in the Banking, Lending, Credit Unions, and other MFI sectors.
It comes fully integrated with mobile money and has been updated to be compatible with banks.
Why use Jisort?
By using Jisort in your lending business in Ghana, you enjoy;
- Ease to keep records – anyone who you credit all records of transactions are saved.
- Ease to approve loans – choose whom to offer loans and who not to.
- Affordable- manage all your loans and transactions from one place easily and cheaply.
- Wide range of other services – besides being a credit management software Jisort also offers services like Loan books, Bulk SMS, Mobile Apps, and many others.