Unsecured Loan Company Business Plan and SWOT Analysis

Unsecured Loan Company Business Plan, Marketing Plan, How To Guide, and Funding Directory

The Unsecured Loan Company Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Unsecured Loan Company business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

Your Business Planning Package will be immediately emailed to you after you make your purchase.

Product Specifications (please see images below):

  • Bank/Investor Ready
  • Complete Industry Research for the Industry
  • 3 Year Excel Financial Model
  • Business Plan (26 to 30 pages)
  • Marketing Plan (24 to 28 pages)
  • 425+ Page Funding Directory
  • PowerPoint Presentation
  • Loan Amortization and ROI Tools
  • Three SWOT Analysis Templates
  • How to Start a Business Guide
  • Easy to Use Instructions
  • All Documents Delivered in Word, Excel, and PowerPoint Format
  • Meets SBA Requirements

Unsecured loans are popular financial instruments among both individuals as well as businesses. Most commonly, people that use unsecured loans typically are doing so in order to consolidate credit card debt or have specific expenses which require a fixed rate loan. The vast majority of unsecured loans issued within the United States are specific for individual borrowers although many small businesses as well as large scale businesses use unsecured loans as well. In the case of businesses, these entities typically focus on using working capital lines of credit are secured by the cash flows of the business rather than a tangible asset. In this business plan, we are going to focus specifically on providing unsecured loans to individuals rather than small businesses or corporations. The startup cost associated with a new unsecured loan company can vary greatly, but most of these businesses are typically started with $1 million or more in order to be able to provide these loans to the general public. It is not uncommon for an unsecured loan business to have a startup cost that is $10 million to $50 million in range. The interest rates charge for an unsecured loan are significantly higher than other types of financial instruments. This is due to the fact that there is a higher degree of risk associated with an unsecured loan. The general interest rate for these types of loans, depending on credit quality, is 10% to 30%. Some states in other jurisdictions do have limits on the level of interest rate that can be charged to individual borrower.

Almost all unsecured loan companies are initially funded with capital from a private investor. Only once a lending business is highly established and profitable will a financial institution provide capital support for these types of businesses. This is usually done in the form of a warehouse line of credit. Of course, if an entrepreneur needs to raise capital from a private investor to start this business then a unsecured loan company business plan is going to be required. This business plan should feature a three year profit and loss statement, cash analysis, balance sheet, breakeven analysis, and business ratios page. Highly specific information in regards to the company’s lending procedures should be included within the business plan as well. A qualified banking attorney as well as a certified public accountant should be hired in order to assist the business with developing its lending manual as well as other protocols and procedures. Although the demographics that are associated with unsecured loans are extremely broad, a well-developed demographic profile should be included as well as this will be used in conjunction with the marketing plan. As it relates to competition, there are tens of thousands of lenders in the country that specialize in unsecured loans as well as high risk loans. As such, a substantial portion of the competitive analysis can be geared towards how the business will retain a competitive advantage, and what benefits it will provide to individual borrowers in order to provide a differentiating factor.

A unsecured loan company SWOT analysis should be developed as well. As it relates to strengths, unsecured loans are able to generate very high fees from interest as well as applicable closing costs. These businesses do have low operating expenses once they are established and interest starts to accumulate. The barriers to entry for this type of company are very high and the gross margins typically around 80% to 90% depending on whether or not bad debt expense is factored into the cost of goods sold.

For weaknesses, this is a highly competitive industry given the higher than standard interest rates that are applied to unsecured loans. As such, these businesses must have an expansive marketing apparatus in order to reach individual borrowers in a cost-effective manner. There are also a number of laws that must be complied with on both the federal and state level.

As it relates to opportunities, most unsecured loan companies expand by simply acquiring additional capital either from a group of private investors or from a third-party financial institution. In some cases, an unsecured loan company may actually act as an originator of these financial products rather than as a direct lender. This can be a very substantial opportunity given the fact that lenders will provide a fee equal to 2% to 10% of the total loan amount for simply closing the lead. For most borrowers, there is very little differentiation as to whether or not they deal specifically with a loan originator or a direct lender.

For threats, changes in usury laws as well as the general economy can have a negative impact on the operations of an unsecured loan company. However, provided that the business is able to have consistent access to capital than these risks are very much stymied. A qualified banking attorney should always be retained in order to ensure that the unsecured loan company is operating within the letter of the law at all times.

An unsecured loan company marketing plan should also be developed in order to ensure that the business can reach potential borrowers very quickly. Given the very highly competitive of nature of this industry, and expansive web presence is usually developed in order to ensure that individual borrowers can go to the website and acquire the funding that they need. Many entrepreneurs that start these types of businesses will hire a search engine optimization firm as well as a pay per click marketing firm in order to ensure traffic to the website from the very beginning of operations. However, the use of pay per click as it relates to unsecured lending is extremely expensive. It is not uncommon for a new unsecured loan company to have to dedicate almost 30% of its startup capital specifically to marketing and advertising activities. On an ongoing basis, many lenders often find that they are spending anywhere from 5% to 20% of their aggregate revenues on ongoing marketing expenses. One of the ways that these businesses will frequently launch operations is by distributing mailers to borrowers that meet certain credit profiles. This can be a very expensive for marketing, but the results can be substantial if a number of people acquire a unsecured loan from the company in this manner.

Some lenders in order to reduce costs have also taken to using social media platforms such as FaceBook, Twitter, Instagram, and LinkedIn in order to promote their financial products. Although this is a new form of marketing for many of these companies, most businesses have shied away from doing this given the fact that most people are going to use an Internet search rather than a search on a social media platform when they need a specific financial product. As such, this can be done on a somewhat limited basis.

People are always going to require access to capital whether it’s for emergencies, relocation, or debt consolidation. As such, unsecured loan companies operate within a very strong arena as it relates to being able to generate high interest rates from unsecured lending products. Once established, these businesses can be highly lucrative and can reach the size of several hundreds of millions dollars a year in interest fees.