The payday lending industry is divided into two types of lenders: online lenders and storefront lenders. The difference is that one operates online and the other at brick-and-mortar stores.

When getting into the lending industry, you must choose whether you want to be an online lender or a storefront lender. Both are valid options, but there are benefits and drawbacks for either choice. For example, some customers prefer online lenders to traditional lenders because they are more convenient and accessible. Others prefer storefront lending for face-to-face interactions.

Let’s dive into some of the pros and cons of each type.

Storefront Lending Opportunities and Challenges

If you want to become a successful storefront lender, you need to know all about storefront lending. Here are the pros and cons of operating a storefront lending business:

Advantages

• Storefront lenders have been around for a long time and are the most common way to get a payday loan.
• People value face-to-face interaction when it comes to financial matters. This is especially true for seasoned customers. Face-to-face interactions help the direct lender build a sense of trust with the borrower.
• Fast service is important when it comes to financial emergencies, and storefront lenders usually lend money quicker than with online lending.
• Clients like having their questions about the loan rates, repayment term, monthly payment plan, debt consolidation options, annual percentage rate, bad credit score loan types, and loan options answered immediately. Storefront lenders can meet this need faster than online lenders.

Disadvantages

• Before starting your business, you must make sure that it can reach a large number of people. Not everyone has access to a car or public transportation option. If your business is in a location without much foot traffic, you may not be able to build up a big enough client base.
• Storefront lenders have to worry about overhead like paying rent and utilities, which may be costly. You may also have to commit a large amount of money to renovate the space and purchase equipment.
• You may lose customers to nearby loan locations that have a higher star rating than you on review websites.

Online Lending Opportunities and Challenges

Just as the name suggests, online lenders conduct their business exclusively online. To run a successful online lending company, you need to know all about online lending. Below are the benefits and the downsides of this type of business.

Advantages

• It is much more convenient for the customer to work with online payday lenders. Everything from an online loan, personal loan, small loan, installment loan, or a title loan can be requested all at once through a form on a website.
• Consumers can visit the lender’s website and fill out the loan application any time of the day, from the comfort of their home, without having to abide by the working hours of the store.
• Unless you decide to build a lending system from scratch, setting up a lending website is relatively more affordable than running and keeping a physical storefront because it doesn’t require a significant upfront investment.

Disadvantages

• The significant downside of operating an online lending business is that technical problems may happen. When your website crashes, it will significantly impact your sales. It can also harm your reputation and lead you to lose potential customers.
• Even though starting your online lending company doesn’t cost a lot, the equipment, software, and programs you use to run your business could become costly.

How to Start a Lending Company

Whether you have decided to operate as a storefront or online lender, you should make sure you meet all the necessary legal requirements. Follow these steps to start your lending company:

1. Form a legal entity
2. Register for taxes
3. Open a business bank account
4. Set up business accounting
5. Obtain business licenses and certificates
6. Purchase a business insurance policy

You may also want to hire an accountant to help you with your finances and keep track of your sales. It is also wise to hire an appliance officer and a lawyer to help you stay out of trouble and guide you in times of uncertainty.

Sum-Up

Becoming a loan officer, whether online or storefront, has its pros and cons. Do your research before going with either of the two options and determine who your target market is to make the best decision for you and your business.

For many of us, when we need to find a loan or other financial services, the first port of call is to look for online lenders. Actually, there are alternatives, and the classic brick-and-mortar businesses that offer lending are still important and play a vital role.

A lot of people would rather head to a storefront and talk to a person. It’s still important to work with a trusted company and that’s where storefront lenders reviews come in. In this guide to storefrontlending, we’re delving into the companies offering lending on the high street.

Just because it is an in-person business, it doesn’t mean you have to take any undue risks, you are protected by state law and can check the reviews of these companies before you take out any lending with them.

What is Storefront Lending?

There was a time when the only options to borrow money involved going to a physical location. Your bank was always an option, but there are plenty of storefront lending companies in the US who trade by offering people the chance to borrow money. We’re talking about a high street “store” where you can go and discuss your needs, and have a face-to-face meeting about it.

In modern times, people have started to refer to this as storefront lending rather than online lending. This helps to differentiate what kind of lending establishment they are. Some companies even offer both a storefront you can visit and online options.

Storefront lending isn’t a new concept at all, and it can offer some advantages. Some people prefer this method of face-to-face interaction.

Overview of companies

Storefront lending companies are either an alternative to online lending, or they offer either option. Most of them still have a website, they just might not give you the option to apply for lending on the internet. An online presence still makes it possible to see reviews, and you might find that you can discuss options online even if the lending takes place in the store.

A storefront can also be a way for these companies to gain customers. People who are walking along the high street may see the company and remember its location. Walk-in customers are possible.

There is an appeal to storefront lending for anyone who is not particularly good with technology. Some people are concerned about the risks of applying for lending online, such as their data getting stolen or entering vital details in a fraudulent website.

Also, people like to deal with another person. This is the way lending has been done for hundreds of years, and can still be done like this if you visit a storefront lender. The benefits of this aren’t just to do with trust, actually, a person in the room with you, who understands the industry, can help you to fill in forms correctly and help to guide you through the process.

If you are looking for a loan with bad credit, storefront lending might give you the option to discuss different options and financial products. You might be able to get a payday loan, even with bad credit, or offer security to help with your loan approval.

Storefront lenders base their whole business on borrowing money, so there is every chance that they will be more flexible than a bank would be. Many storefront lenders also have more generous underwriting, so the chances of borrowing if your credit score or income are low is likely to be higher in this scenario.

Storefront lenders still have to abide by all of the state’s lending laws. For example, there may be a maximum or minimum payment term and APR, so there is no extra risk attached to getting your lending in-person.

Though storefront lending is nowhere near as popular as it used to be, the industry is likely to continue to be important in the future as people still want a physical location they can visit to take out lending, and to seek help and advice on the lending products that are most suitable. For low incomes and poor credit scores, this can be especially useful and increase the chances of being able to borrow.