How To Start A Loan Shark Business In South Africa 2022 - The Essential Guide
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How to start a Loan Shark Business In South Africa 2022 – The Essential Guide

how to start a loan shark business in south africa 2022

Starting a cash loan company in South Africa might be resource-consuming but with the right money lending business strategy, you can make a lot of profit annually.

If rightly invested in, the money lending business is highly profitable, since almost everyone in South Africa needs a loan to start their business or assist in their day-to-day activities

On the contrary, not all loan businesses are tagged as being legal in South Africa. Some money lending companies are called loan sharks. Loan sharks’ main aim is to make a profit by giving out loans to unqualified personnel and increasing their interest rates.

For example, granting loans to people under debt review, also to people with bad credit scores, and people who are ineligible to request a loan in South Africa.

But then there are advantages to this business; one won’t have to go through all the necessary verification procedures, and loan sharks make it seem simple to lend and borrow money.

These loans are much more accessible for people because they can be obtained anywhere in the nation.

To maximize its beneficial uses, we will discuss some practical procedures on how to start a loan shark business in South Africa and make money either from home or office. 

But let’s see the real meaning of a loan shark business, how it is being run and financed, including procedures in getting a license.

What is the loan shark Business in South Africa all about?

The loan shark business is all about lending money to people at extremely high-interest rates and using threats or violence to acquire the money back within a short period.

here’s a good illustration of loan sharks

The main aim of loan sharks in South Africa is to maximize profit. The interest rate is above the legal commission established by the National Credit Act (NCA).

In summary, Loan sharks charge borrowers higher commissions than the legal fees. For example, If you’re given R5000, you’ll be charged R7000 as payback fees within 45 days even though you might be in debt.

How a Loan Shark Business Works

Loan sharks do not require fact checks or credit reports. even if one is under debt review or has a bad credit score, they’ll still approve a loan.

The loan shark micro-lending business is profitable in South Africa since many individuals need a personal loan for starting a business.

Loan sharks typically have large clients and when they lend money at a 15 percent biweekly interest rate, they typically receive $3,786 back for every $100 they lend.

Registering a cash loan shark business in South Africa might be a little bit difficult for some reason, but then let’s see how you can use the money lending business strategy to; a cash loan sh company in 2022.

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Advance ways to start a Loan Shark Business In South Africa 2022

cash loan micro lending business in south africa

To start a hard money lending business, there are certain steps you’ll have to follow to open your loan company, and they are listed below.

1. Draft a good business plan

The first step to opening a loan business is to draft your business layout well. A business that is planned would see a higher growth rate than anyone that isn’t.

If you’re an entrepreneur starting a loan business, knowing the precise action to take will help you succeed in the long run. 

Example of a good business plan

Additionally, it would assist you in understanding the purpose of your company, whether it be large-scale or small-scale, and in achieving your objectives.

When writing your business plan, it is important to always include the goal of your business, business profile, target audiences, and more. 

The plan should, at the very least, include the following details:

i. Understand the Industry: 

It is important to understand the kind of business you want to start. for instance, a micro loan lending business needs adequate and consistent funding to keep a customer by providing low-interest loans to low-income individuals and organization

ii. Conduct Market Research: 

Conducting market research helps you to understand and also become specific to your customers, by solving their problems. 

You can’t just start a loan shark business and expect everyone to start flooding your way because you’re not checking their credit score. NO! There’s more to this.

Through market research, you’ll gain a deep insight into the business. 

When researching your start-up, always check for campaign effectiveness, competitor research, Consumer research, Customer segmentation research, Product development, and more.

iii. Decide if you would buy a micro-lending business

To start a loan shark business in South Africa, you’ll need to decide if you would rather buy an already established company or just start your own micro-lending business from scratch.

Starting from the beginning is always the best because it creates room for motivation and expansion. the capital you’ll use to buy an already established money lending business might be huge and unaffordable.

Would you also want to get a loan to buy the company? NO! And this would also create an avenue for you to learn new things in your field.

iv. Choose your company’s name

Just as your name segregates you from your peers, so also it is to your company. you should be able to choose a name that is related to your business and the services that you offer.

You can automatically generate your business name online from any generator like All you have to do is to input your desired keyword and the tools would suggest more names for you.

A business name is a name that you use to identify your business, to make things look easier you can just name your money lending business after yourself and that’s fine.

v. Create a micro loan business profile pdf

One of the best money lending business strategies is to create a pdf file of your business profile. This profile gives an idea of what your business is all about, all about your organization plan should also be well labeled including your goals and objectives.

You should also state your target audience, Name the awards your company has received, describe the products and services you offer, including your company’s history, add your company’s mission statement, tell your story, and other important information.

A business profile shows how serious you’re in the company and you should never neglect these steps because it is one step to achieving trust and gaining customers.

vi. Know your Niche

A niche is a specialized or focused area of a broader business. focusing on a niche would help you differentiate yourself from intense competition.

There are several niches in the money lending business. for example niches like Unsecured debt [personal loan], mortgage loan, credit loan, payday loan, and many more.

2. Financing and Capital

One of the main importance of budget financing is to ensure that your business doesn’t experience circumstances along the line. For example, being out of cash to pay a lender, not being able to buy spoilt business tools, and more.

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Strategizing your source of finance helps to tackle the dilemma of running out of business. And also, you should know how to manage the funds within the company and plan for the expenditure of funds on various aspects in the long run.

To start a money lending business in South Africa, you might need a capital of 50,156.00 ZAR to get started at least a minimum for a small-scale loan shark business in 2022.

But then is it advisable to always start small and according to your budget. When planning for your Finance and Capital, endeavor to include the following criteria;

i. Create a Budget

Creating and planning a well-structured budget sets you up for about 30% success in the loan shark business. The idea here is to set up a budget for a small-scale business.

You don’t have to rush through anything. When creating a budget, keep in mind that you’ll also need to provide your client with good, if not the best service in town. So this is a segment that must be well organized, and you might need a friend who is already in the business to guide you through it.

ii. Minimum Investment

It is wise to understand the minimum investment you’ll be able to risk. To start a loan shark business in South Africa, you might need 50,000 ZAR as a minimum start-up fund.

It is now left for you to determine the minimum amount of money to give out so as not to go bankrupt and run out of business.

3. Registering your loan shark business

To get your business started you’ll need permission from your state to start a money lending business. you won’t state your main intention. 

When registering your business the following license must be considered:

i. Register for Taxes

To register your business for taxes in South Africa, you must first become an employer and this must be done within 21 days of employing someone.

In South Africa, businesses register for taxes with SARS, you’ll be able to deduct PAYE and UIF from your employees’ salaries and pay it over to SARS every month.

ii. Open a business bank account

A business account is needed to make your brand outstanding. your customer would be able to differentiate when you send a loan to them and they would be able to pay it back.

It also allows you to pay for any business-related expenses like salaries, lenders, electricity bills, and more.

iii. Get a business insurance

Getting an insurance policy covers your business. It helps cover the costs associated with property damage and liability claims. 

If you don’t get an insurance plan, during damage or loss, you will have to pay from your pocket, and that is a huge loss.

iv. Register your business name

To register your business, you’ll have to submit a proposal to the Companies and Intellectual Property Commission (CIPC) in South Africa. 

Although you can make this process online through their website You can register your money lending business as an LTD, INC, and others.

v. Launching your Business

After you’ve planned how you can finance and start lending money to customers. Next is launching your cash loan business, targeting a selected group of people.

When launching your loan shark business, always try to check for a good and ventilated location. It is advisable to always lend money to people within your geographical area if you’re just starting.

5. Branding and Marketing

According to randomtalks, Branding is the process of creating a strong and positive awareness about your brand or business, its products or services to consumers, by displaying logos, past products, and customer reviews.

Branding and marketing help to make services go viral and also increase sales. Advertising, selling, and delivering products to consumers or other businesses are all part of marketing. 

As a new cash loan business owner, you are responsible for the growth of the company. To make your business known to people you must carry out a good marketing strategy.

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Ensure you have positive reviews also, because 90% of customers tend to transact with businesses that have great reviews. While performing promising Marketing and branding the following characteristics must be considered too.

i. Buy your domain name [website]

To aid easy registration and online loan lending business transactions, the use of a website is unavoidable. 99.9% of loan corporations make transactions online and you should not be left out.

Apart from [performing business transactions on your website, it also helps to display relevant information about your services, and also helps to create brand awareness,

ii. Get your logo and tagline

Getting a logo is the foundation of a strong brand identity. It helps create a first impression and makes you stand out from the crowd.

A tagline is similar to a slogan. It is critical to have one because it will improve your advertising campaign and make your company appear confidential to your clients.

6. Attend Seminars and Training

Some online and physical seminars are arranged to teach you how to start a loan shark business in South Africa and make a huge profit. Most of these tutors are professionals and have started successful money lending businesses themselves.

The loan shark money lending business is not legalized in South Africa. The National Credit Act (NCA) goes against it and it is tagged as being a criminal offense because of its way of operations.

Loan sharks might go the extra mile to get one debit card details, a client’s contact list, geographical tracking system being installed on their apps.

Furthermore, loan shark businesses are illegal because of the high-interest rate being imposed on loans granted to people and regaining it back through violence or threats.

Can a loan shark be legal in South Africa in 2022? The short answer here is Yes, a money lending organization might decide to follow appropriate steps in granting loans to people. 

Loan shark businesses can be found almost anywhere in South Africa, and it is best to contact them to learn more about how they operate.

Registering a loan shark business in south Africa

Is it possible to register a loan shark business in South africa? Don’t be deceived, you might not be able to register a business that goes against the law of the nation. So it would be difficult to register a loan shark business in 2022, but then registration isn’t necessary if you’re just starting.

But if you seek growth and expansion, you’ll have to change to a legal entity and seek registration by paying a non-refundable application fee of R500 and filling out all required forms. 

How much do you need to start a money lending business in South Africa

To start a loan shark business in South Africa, a minimum amount of $3,000 might be needed to start as capital. This would be enough to secure a location, pay for loans applied for, register your business, and lots more.

Want to gain more insight into the micro-lending loan shark business in 2022? Then watch this video below


I hope this guide on how to start a loan shark business in South Africa was helpful and educational. If you have any questions to ask, modifications or verification, you can simply use the comments section below.

Sources: Randomtalks

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