Storefront Lenders vs Online Lenders

Storefront Lenders vs Online Lenders

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:


  • 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.


  • 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.

Storefront Lenders vs Online Lenders

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.


  • 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.


  • 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.


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.

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