How to Open a Financial Agency

Tuesday, 4th February 2020 at 12:30am - 3am Wednesday, 14th October

If you have a strong interest in financial activities and mortgages, loans and financing are among your favorite topics, perhaps at least once in your life you have thought of working in a bank or opening a financial agency alone or in a franchise.

Maybe you've worked as a financial agent for some time now and are thinking of starting your own business. In both cases, this is not an easy step to take, therefore before starting you need to think about all the expenses, authorizations and knowledge you need to have to undertake this activity.

Financial agencies in fact, like banks, provide loans and loans; unlike banking institutions, however, they do not allow the opening of a current account and do not give the possibility of carrying out other banking operations.

Let's see together how to open a financial agency and what the main characteristics of this activity are.

Open a financial agency: the characteristics

Before opening a financial agency you must know that this is regulated by a specific legislative decree, which provides for a specific registration and controls by a body that regulates them.

The financial company, in fact, falls into the "financial institutions" category. These are companies other than banks which, providing payment services and granting loans and financing.

But what exactly do financial companies do? An activity of this kind provides a specific description of the actions that can be carried out or not, these are in fact identified and foreseen directly by law.
These can request the credit with mortgage guarantee , carry out the assignment of the fifth of the salary, manage the commercial credit and factoring. A financial agency can also manage financial leasing, management of means of payment, issuing of credit cards, revolving and prepaid cards.
What it takes to open a financial agency

Opening a financial agency is not easy, especially if you want to start it alone and without affiliating yourself with those already present and authorized.

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This is an essential obligation both when opening an agency on your own and when choosing to open a franchise agency.

With this finance company registration procedure you can obtain a certificate that allows you to deal with the activities of granting loans, and operations for the performance of payment services.

To open a financial company, in addition to registration, it is necessary to start the business correctly. This must have a specific corporate form chosen from: joint stock company , limited liability company , limited partnership, or a cooperative company.

Whatever the form chosen, it is necessary to provide the specification for the financial activities as the object of the company. These must also have a paid-up share capital which cannot be less than five times the minimum capital established for setting up a normal joint-stock company.
In addition to the capital, it is also necessary to indicate who the participants in the company's share capital are, who the company representatives are and finally all the requirements of professionalism and integrity must be reported by law.
Choosing to open a financial agency on your own therefore provides for a complex bureaucratic process required by Indian law. In addition, it is necessary to have a truly immense share capital, as well as having funds for the provision of loans .

Given the difficulty of opening a financial company, many choose to rely on the franchise formula. By opening a business of this type in franchising, in fact not only will it be enough to make a negligible investment, compared to that if you open it yourself, moreover, you will not have to deal with the difficult Indian bureaucracy, but it will be enough to have the right knowledge and skills in the field financial.

Because you need to have a business plan

The business plan is very useful, as it allows you to have, before opening a business, a very precise plan of how to structure every aspect of your company from legal, economic to structural ones.

In fact, this document is used to identify corporate strategies, the results to be achieved in the long or short term, and finally how to monitor the objectives and invest the budget.

Setting up a business plan is also necessary to achieve various purposes. First of all, this tool is used for those who want to obtain a loan or loan to open a business. Not only that, this document also allows you to have a clear idea of ​​the business plan to follow.

The location

Opening a financial agency also involves choosing a specific location. Usually, when opening a franchise business, there are key rules to follow.
For example, the activity must be open in a center of at least 25 thousand inhabitants , in some cases it is possible that the agency also requests a larger user base, therefore the choice of a location in an area with at least 150,000 thousand inhabitants.

In addition to the area, it is also very important to have an office that allows the creation of at least two separate rooms , that is, an environment dedicated to reception and one to be used as a private office.
Finally, one must consider a location that allows the installation of broadband internet coverage, for the use of work management software.

The initial expenses for leaving

If you open a financial agency yourself, you must open a company with a share capital of at least 25 thousand dollar.
The initial expenses then foresee a series of innumerable bureaucratic fulfillments which, in addition to being complex, are also expensive as it is necessary to make use of the help of an accountant.
The initial costs for opening a financial business in franchising, on the other hand, are lower, in this case the initial investment varies from 2 thousand up to 5 thousand dollar, depending on the franchisor to whom you apply.
In both cases, the initial costs should also be considered for renting the premises, which range from 800 dollar upwards. Finally, you must connect the user, ask for the advice of the accountant, and consider the expenses for the office furniture and the installation of the PC and telephone.

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Management fees

The management costs , ie those to be considered monthly, are different. The main ones to consider include:

1.       Monthly rent

2.       Various bills

3.       ADSL subscription

4.       Staff salary, if any

5.       Room maintenance

The methods of financing

To open a finance company in franchising or on your own, in both cases you need to apply for a loan, unless you already have funds to use.
Depending on the size of the loan, you can choose to apply for funding from banks or a financial company.

There are different forms of loan among which you can choose, you can request a personal loan, an unsecured loan, or a business loan from a bank in your area.

How much can you earn with a financial agency

Financial agencies expect commission earnings . What does it mean? In a nutshell, when you open a business of this kind you earn a percentage that varies between 10 and 12% every time you issue a loan or loan.
It also earns based on the issue of other services such as insurance, or through the assignment of credit cards and revolving.

A financial agency's earnings per month can vary widely based on how many loans, consumer loans and financial services are offered to customers .
This is a very profitable activity especially if conducted professionally, and if you rely on a known name as it happens when you open a franchise agency.

Why open a franchise financial agency

Opening a franchise financial agency , as we have seen, can be an optimal idea, as it is very difficult to provide for the opening of a business of this type completely on your own

However, opening a franchise business also offers other advantages:

1.       Adequate support and training for opening and managing the business.

2.       Furniture and necessary software  supplied by the parent company to be able to undertake an activity of this type.

3.       Territorial exclusivity possible.

4.       Possibility of being able to use a name that instills trust in customers.

The trust and the sense of reliability are very important in this sector, as new borrowers want to rely not only to those who offer the best rates, but especially to a company they know, and that guarantees a high level of professionalism and service to customer .

Now you know how to open a financial agency, but if you want to be really sure, undertake the real business for you, take the quiz immediately

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Displaying 1 comment
at 12:28pm on Sunday, 17th May 2020
Thanks for sharing a guide on how to open a financial agency here. As I am working for company, I appreciate this guide a lot, and I think it will help me open my own agency.


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