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Money Lending Business Plan (Example and How to Create One)

• Author Content Team
• Published February 21, 2024

A money lending business plan serves as an invaluable strategic guide for establishing and operating a successful lending operation.

Crafting a comprehensive plan walks you through critical thinking on all facets of your envisioned lending business, including:

• Products/services to offer
• Operational processes and resource needs
• Foundational financial analysis
• Marketing and growth strategies
• Technology requirements
• Risk factors and contingency plans

Essentially, it encompasses detailed blueprint of your planned venture at launch and for years to come.

Having this documented plan helps drive focus when mobilizing resources and executing on priorities. It also communicates vision to prospective investors/partners seeking thorough understanding of you lending concept.

Used as a living document, a lending business plan guides continual improvement over time as market conditions and borrower needs evolve.

While requiring effort upfront, a well-constructed plan pays dividends through providing clarity, direction, and a benchmark for progress as you build out your money lending operation.

How good is money lending business?

The money lending business can be both good and bad, depending on several factors. Here’s a breakdown:

Potential Benefits

• High Potential Returns: Money lending can be profitable due to interest rates charged on loans. The higher the risk, the higher the interest rate is likely to be, leading to potential for significant income.
• Passive Income: Once you’ve established your business, it can generate a relatively passive income stream from interest payments.
• Demand: There’s always a demand for loans, whether from individuals needing help with expenses or businesses looking for funding.
• Flexibility: You can potentially set your own terms and conditions depending on your risk appetite and the lending structure.

Challenges & Risks

• Regulation: The lending industry is often heavily regulated, requiring licenses and compliance with various laws. This can be complex and costly.
• Risk of Default: There’s always a risk that borrowers won’t repay their loans, resulting in losses for you. Careful credit risk assessment is crucial.
• Competition: The lending market can be competitive, with banks, other lenders, and peer-to-peer lending platforms providing alternatives. You need to offer something unique or competitive to succeed.
• Capital Requirements: You’ll need a source of funds – either your own capital or investors – to start a lending business.

How to Make Your Money Lending Business More Successful

• Know the Laws: Get well-versed in the regulations and laws governing lending practices in your area.
• Strong Underwriting: Implement thorough processes to assess borrower creditworthiness, reducing your risk of defaults.
• Find a Niche: Specialize in a particular type of loan (e.g., small business loans, mortgages, personal loans) to establish expertise and target your marketing.
• Competitive Rates and Terms: Stay aware of competitor offerings and strike a balance between attractive terms and managing your risk.
• Excellent Customer Service: Building strong relationships with borrowers can encourage on-time payments and increase the chance of repeat business.

The money lending business can be lucrative but it also involves risk and careful management. If you understand the regulations, have processes to minimize defaults, and provide a valuable service to borrowers, it can be a good business venture.

Here’s how to create a business plan for your money lending business.

Conducting Market Research

One key component when developing a money lending business plan involves conducting thorough market research around the demand for lending products and services you aim to provide.

This research should seek to quantify factors like:

• Size of addressable market – The broader base of prospective borrowers meeting basic eligibility criteria regarding location, assets, credit standing, or other attributes. Provides total available market ceiling.
• Target segments – Refine broad market by attributes of subsets most likely to seek/qualify for loans. Assess segment size along with common borrowing needs.
• Competitive analysis – Profile existing lending providers competing for target segments. Detail their offerings, rates, processes strengths/weaknesses.
• Projected market share – Given competitive landscape and your differential advantages, estimate potential portion of business you can capture.

Robust research synthesizes data from sources including:

• Government census/economic data
• Financial trade association projections
• Customer surveys and interviews
• Competitor product literature

Isolate strategic opportunities where significant borrower demand exists, but current lending options are scarce, costly, or cumbersome to access.

Translating research into projections around number of prospective borrowers, conversion rates, and average loan sizes allows for mapping revenues and expenses at various scales.

Revisiting assumptions annually updates understanding of outlooks and opportunities as the basis for adjustments.

Building Financial Forecasts and Projections

With research providing estimates of market opportunity, a money lending business plan needs to translate projections into expected financial performance.

Crafting projected income statements, balance sheets, and cash flow statements provides clarity on the numbers needed to viably launch while guiding growth.

Income Statement

Shows projected profitability by capturing:

• Interest income
• Loan origination/application fees
• Other revenue
• Less operating expenses

Illuminates expected profit margins at target volumes. Helps set lending rates and fees.

Balance Sheet

Estimates asset and liability positions over time.

Key line items:

• Cash reserves
• Outstanding loan balances
• Debt obligations
• Shareholder equity

Informs capital requirements and funding sources.

Cash Flow Statement

Tracks net cash generated/spent:

• Cash from operations
• Investing cash flows
• Financing cash flows

Ensures liquidity to fund lending and operations.

Building in Contingencies

While projections aim to model realistic outcomes, uncertainties exist when starting any business. A money lending business plan needs to incorporate contingencies that brace operations for unexpected events.

Building contingencies involves stress testing assumptions to account for potential downside scenarios related to:

Lower Than Expected Loan Demand

Triggers may include economic shifts or new competitive entrants. Contingency actions could involve:

• Adding new customer acquisition channels
• Expanding lending footprint geographically
• Adjusting rates/terms to incentivize borrowing

Maintains revenue streams amidst demand swings.

Higher Than Expected Loan Defaults

Contributing factors can range from interest rate hikes to lax underwriting. contingency maneuvers might require:

• Tightening underwriting criteria
• Increasing collections staff/activities
• Securing additional loan loss reserve capital

Keeps credit risks in check.

Insufficient Funding Access

May result from restrictive capital markets or partners backing out. Creates need to pursue options like:

• Providing loan guarantees/collateral
• Exploring alternative private funding sources
• Curtailing lending until funding secured

Prevents overextending beyond capital means.

While not expected, incorporating contingencies for big picture risks allows for agile response if challenges surface. Displays prudence to prospective investors/partners as well.

Defining Operational Infrastructure and Resource Requirements

With projections and contingencies established, the money lending business plan needs to map out key infrastructure elements and resource needs critical for delivery.

This involves detailing essential components like:

Staffing Requirements

• Management/executive roles
• Loan underwriting personnel
• Support staff for documentation, payments, customer service
• Any outsourced provider positions

Outline key responsibilities and ideal background sought.

Core Technology Architecture

• Loan management software
• Risk rating systems
• Customer relationship management (CRM) platforms
• Accounting systems

Itemize critical integration points between systems.

Facilities/Equipment Needs

• Office space requirements
• Furnishings and supplies
• Security measures
• Telecom/internet capabilities

Ensures environment supports target operations.

Startup and Ongoing Budgets

• Initial outlays for configuration expenses
• Salary estimates by role
• Projected overhead costs

Forecasts spending requirements over time.

Defining these key elements provides actionable direction on mobilizing an operating infrastructure aligned to plan projections and target segments. Assesses feasibility.

Detailing Growth Strategies and Execution Tactics

Beyond getting initial operations running, a money lending business plan needs to map out how to drive growth in borrowers, market share, lending portfolio, and ultimately revenues/profits over the long haul.

This typically involves crafting strategy across dimensions like:

Product Strategy

What loan products offer the biggest opportunities now and into the future? Plan helps identify ability to expand into new areas like:

• Personal lending
• Commercial real estate lending
• Specialty asset lending
• Peer-to-peer lending exchanges

Options for responsibly broadening products over time .

Market Penetration Strategy

How deeply do we reach target segments ? Can assess tactically increasing market penetration via:

• Local vs regional vs national lending
• New channel partnerships
• Expanded marketing budgets/reach
• Technology enhancements

Widens borrower access and share.

Innovation Strategy

What new capabilities and offerings improve competitiveness? Can pinpoint areas for innovation like:

• Streamlining application/funding processes
• Customizing risk algorithms
• Offering complementary services

Differentiates borrower experiences.

Painting a strategic vision for prudent, sustained growth gives stakeholders confidence in execution abilities while assuring teams have outlined roadmap for expansion.

Reviewing and evolving outlined tactics keeps growth trajectory headed in the right direction.

Money Lending Business Plan Template

1. executive summary.

• Brief overview of key details
• Mission statement
• Company description
• Products and services offered
• Target customer profiles
• Ownership structure and management team
• Startup funding requirements
• Financial projections
• Keys to success

2. Company Analysis

• Industry trends and outlook
• Market size and growth forecasts
• Customer personas
• Purchasing factors
• Direct and indirect competitors
• Their strengths and weaknesses
• Internal strengths and weaknesses
• External opportunities and threats
• Company differentiators

3. Services

• Personal loans
• Payday loans
• Business loans
• Debt consolidation loans
• Interest rates
• Payment schedules
• Loan amounts
• Collateral policies
• Compliance policies and licensing
• Application and approval process

4. Marketing Plan

• Branding strategy
• Search, Display, and Social Media Ads
• Print, Radio, Direct Mail
• Partnerships and referrals
• Sales process and pipeline
• Retention programs for existing clients

5. Operations Plan

• Office space and equipment
• Policies and procedures
• Management team
• Loan officers
• Support staff
• Vendor relationships
• Daily workflow

6. Financial Plan

• Investments
• 3-5 year profit and loss projections
• Break-even analysis
• Cash flow forecasts
• Balance sheet
• Worst/Best case scenarios
• Key financial metrics and benchmarks

Key Takeaways

• Conduct extensive market research to size opportunities and refine target segments
• Build projected financial statements modeling performance
• Stress test assumptions through contingency planning
• Map out staffing, tech, facilities, and equipment needs
• Define strategies and tactics for driving growth in products, market penetration and innovation over time
• Money Lending Business Strategy Example + Ideas
• Top #7 Loan Management Software for Small Lenders
• What is Jisort – Meet your finance app

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Money Lending Business

Back to All Business Ideas

How to Start a Money Lending Business

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on June 15, 2022 Updated on March 13, 2024

Investment range

$8,550 - $18,100

Revenue potential

$72,000 - $300,000 p.a.

Time to build

3 – 6 months

Profit potential

$58,000 - $120,000 p.a.

Industry trend

“Neither a borrower nor a lender be,” Shakespeare warned. Yet many have ignored his advice and today non-bank loans represent a $7 billion US industry. You could make good money with your own money lending business, as you’ll charge a higher interest rate and fees than those charged by banks because of the additional risk involved.

But before you start searching for investors, you’ll need to understand the process of launching a business. Luckily, this step-by-step guide has all the information you need to put you on the road to entrepreneurial success as a lender. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Before we get into the details, it’s important to clarify the type of business under discussion. Money lending businesses provide capital to individuals, generally those who cannot qualify for traditional bank loans. Money lending businesses can be structured in a number of ways:

• Private Lending – With a private lending company, you’d be lending your own personal funds to individuals, either unsecured or secured by collateral.
• Hard Money Lending – You would form relationships with money brokers and investors who would put up capital for you to use to make loans. The brokers or investors will take the interest earned and you would charge borrowers a loan fee.
• P2P Lending – Peer-to-peer lending is usually online and is basically a money lending app that connects individual lenders and borrowers. The P2P lending company usually takes a fee for the loan service. 

This article will focus mainly on a hard money lending business, which requires much less capital to start. Even so, starting a money lending business has pros and cons to consider before deciding if it’s right for you. 

• Good Money – Make 3-5% of each loan up front
• Flexibility – Run your business from home
• Large Market – Customers can be anywhere
• Build Relationships – Takes time to find investors, clients
• Attorney Fees – Need a prospectus for investors, plus loan documents

Money lending industry trends

Industry size and growth.

• Industry size and past growth – The US installment loan industry was worth $6.7 billion in 2021 after declining 1.3% annually over the previous five years.(( https://www.ibisworld.com/united-states/market-research-reports/installment-lenders-industry/ ))
• Growth forecast – The US installment loan industry is projected to continue to modestly decline over the next five years. 
• Number of businesses – In 2021, 19,551 installment loan businesses were operating in the US. 
• Number of people employed – In 2021, the US installment loan industry employed 106,935 people. 

Trends and challenges

Trends in the money lending industry include:

• Hard money loans are growing in size and more often used for home purchases. This means higher fees for hard money lenders.
• More and more cross-border hard money loans are being made due to investors wanting to expand their reach globally.

Challenges in the money lending industry include:

• Money lenders have come under much scrutiny for alleged predatory lending practices and the high rates and fees they charge.
• Regulations are continuously tightening on money lenders, creating obstacles to doing business.

Demand hotspots

• Most popular states – The most popular states for lenders are South Dakota, Minnesota, and Michigan.(( https://www.zippia.com/lender-jobs/best-states/ ))
• Least popular states – The least popular states for lenders are Indiana, Tennessee, and Virginia.

What kind of people work in money lending?

• Gender – 50.8% of lenders are female, while 49.2% are male . (( https://www.zippia.com/lender-jobs/demographics/ ))
• Average level of education – The average lender has a bachelor’s degree.
• Average age – The average lender in the US is 44.9 years old.

How much does it cost to start a money lending business?

If you decide to start a hard money lending business, your startup costs will range from $8,000 to $18,000. The largest cost will be attorney fees. You will need a prospectus to give to potential investors detailing how you will do business and how they will get a return on their investments. Such documents are complicated and costly. You’ll also need a website and a marketing budget.

How much can you earn from a money lending business?

Hard money lenders typically take a 3% to 5% fee of the total loan amount. Since a large portion of the loans you make will be for homes, these calculations will assume an average loan amount of $150,000, which would give you an average fee of $6,000 per loan. 

The interest paid on the loans will go to the investors. Your profit margin should be high, at around 80%. In your first year or two, you could do 12 loans a year, bringing in $72,000 in annual revenue. This would mean $57,600 in profit, assuming that 80% margin. 

As you build a reputation, you could increase that number to 50 loans a year. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 40%. With annual revenue of $300,000, you’d make a handsome profit of $120,000.

What barriers to entry are there?

The only barrier to entry for a money lending business is building relationships with investors, which often takes a lot of networking and leg work.

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Step 2: hone your idea.

Now that you know what’s involved in starting a money lending business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research money lending businesses in your area to examine their products and services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a micro lending company or a money lender that will provide a business line of credit. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as term loans for those with bad credit, or hard money startup loans.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You’ll need to determine what types of loans to offer, and how you will evaluate credit scores to determine whether to make the loans. You’ll need to lay out specific lending criteria in your investor prospectus. 

As far as the types of loans, you can offer mortgage loans, business loans, personal unsecured loans, car loans, or lines of credit. 

How much should you charge for money lending?

Hard money lenders typically take a 3% to 5% fee of the total loan amount. The interest paid on the loans will go to the investors. The interest rates you charge will depend on the interest rate limits in your state. Working alone, your profit margin should be high, at around 80%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will generally be anyone with bad credit who needs a loan. You should market on TikTok, Instagram, Facebook, and even LinkedIn, which is also a good way to connect with potential investors. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Money Lending Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “money lending” or “hard money loans”, boosts SEO
• Name should allow for expansion, for ex: “Instant Money Solutions” over “Home Sweet Loan”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Money Lending Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A brief summary of the business plan, highlighting its key points and objectives.
• Business Overview: An overview of the money lending business, including its mission, vision, and legal structure.
• Product and Services: Details about the types of loans or financial services offered, including terms, interest rates, and eligibility criteria.
• Market Analysis: An examination of the target market, including size, demographics, and trends, to identify potential customers.
• Competitive Analysis: Evaluation of competitors in the lending industry, assessing their strengths and weaknesses.
• Sales and Marketing: Strategies for attracting and retaining customers, including advertising and promotional efforts.
• Management Team: Introduction to the individuals leading the business, highlighting their qualifications and roles.
• Operations Plan: Information on day-to-day operations, such as loan application processing, risk management, and customer support.
• Financial Plan: Projections for revenue, expenses, and profitability, as well as funding requirements and financial forecasts.
• Appendix: Supporting documents, such as legal agreements, market research data, or additional information to enhance the plan’s credibility.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to money lenders.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your money lending business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a money lending business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Money Lending Business Licenses and Permits

Starting a money lending business requires obtaining a number of licenses and permits from local, state, and federal governments.

You’ll need to meet the requirements to be a licensed money lender in your state. You’ll also need to follow federal and state regulations on lending practices. 

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your money lending business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as  HES , Black Knight , or Moneylender , to manage your loan processes, accounts, credit checks, and fees. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Starting a money lending business can be lucrative, but success hinges on effective marketing strategies. Here are practical tips beyond creating a website and networking:

• Targeted Local Advertising: Utilize local newspapers, community bulletin boards, and radio stations to advertise your services, ensuring your message reaches the right audience within your community.
• Strategic Partnerships: Forge partnerships with local businesses like real estate agencies or car dealerships, creating a referral system where they recommend your lending services to their clients.
• Educational Seminars: Host free financial literacy seminars in your community to position yourself as an expert and attract potential borrowers seeking valuable insights into managing their finances.
• Social Media Engagement: Leverage social media platforms to engage with your audience, share financial tips, and create a community around your brand, fostering trust and credibility.
• Customer Testimonials: Showcase satisfied clients through testimonials in your marketing materials, emphasizing success stories and building credibility among potential borrowers.
• Loyalty Programs: Implement a loyalty program offering incentives or discounted rates for repeat borrowers, encouraging customer retention and word-of-mouth referrals.
• Direct Mail Campaigns: Design targeted direct mail campaigns to reach specific demographics, using compelling offers or promotions to capture the attention of potential borrowers.
• Online Reviews and Ratings: Encourage satisfied customers to leave positive reviews on online platforms, enhancing your online reputation and influencing potential borrowers in their decision-making process.
• Community Involvement: Actively participate in local events and sponsor community initiatives to increase your brand visibility and foster a positive image within the community.
• Referral Programs: Develop a referral program where existing customers are rewarded for referring new borrowers, creating a network of advocates who vouch for your services.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your money lending business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your money lending business could be:

• Bad credit? We can put you back in the black 
• Mortgage loan denied? We’ll finance your new home 
• Affordable loans to build your business

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a money lending business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in money lending for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in money lending businesses. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a money lending business include:

• Loan Processors – handle loan paperwork
• Loan Originators – take loan applications, get loan informational documents
• General Manager – scheduling, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Money Lending Business – Start Making Money!

Money lenders provide a valuable service to people unable to obtain loans, which is why it’s big business. If you can build solid relationships with investors and are committed to helping people, you could build a lucrative lending operation, even starting from your own home! 

Now that you know what’s involved from a business perspective, it’s time to launch your successful money lending business. 

• Money Lending Business FAQs

You can make a 3% to 5% fee on each loan amount, so it can be very profitable. The key is to build relationships with investors who will fund your loans.

Hard money lenders typically take a 3% to 5% fee of the total loan amount. The interest paid on the loans will go to the investors. The interest rates you charge will depend on the interest rate limits in your state.

To differentiate your money lending business, focus on providing competitive interest rates, flexible repayment terms, exceptional customer service, quick loan processing, transparency in fees and charges, and personalized financial solutions tailored to individual borrower needs.

Yes, you can start a money lending business on the side, but it requires careful consideration of legal and regulatory requirements, managing risk effectively, and ensuring proper time management and resources to handle both your main job and the lending business.

Assess the creditworthiness of potential borrowers by conducting thorough credit checks, verifying their income and employment stability, reviewing their credit history and repayment patterns, and considering any collateral or guarantors provided. Additionally, evaluate their debt-to-income ratio and analyze their financial statements to gauge their ability to repay the loan.

Expand your money lending business by developing strategic partnerships with local businesses or professionals, leveraging digital marketing strategies to reach a wider audience, offering referral incentives to existing clients, exploring new geographical regions or markets, providing online loan application and processing options, and continuously enhancing your reputation through positive customer reviews and testimonials.

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Money Lending Business Name
• Create a Money Lending Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for Money Lending Business Licenses and Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Money Lending Business - Start Making Money!

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How to Start a Money Lending Business

Last Updated: April 15, 2024 Fact Checked

This article was co-authored by Clinton M. Sandvick, JD, PhD . Clinton M. Sandvick worked as a civil litigator in California for over 7 years. He received his JD from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013. There are 11 references cited in this article, which can be found at the bottom of the page. This article has been fact-checked, ensuring the accuracy of any cited facts and confirming the authority of its sources. This article has been viewed 328,425 times.

If you want to start a money lending business, you will need to decide what kinds of loans you want to make—payday, mortgage, or installment loans. You may choose to start a lending business using only your own money or money from a group of investors. Starting a money lending business will require that you develop a business plan and gain the necessary government licenses.

Preparing to Start the Business

• You should search your state’s business filing office to find out if a name has already been taken.

• Executive summary. You will need to briefly describe the nature of your business and why you think it will be successful. The executive summary should contain your mission statement as well as company information. As a startup, you should focus on explaining how your experience and background will contribute to the business’s success.
• Company description. Explain the nature of the business, your intended market, and the market needs your lending business will satisfy. For example, you might want to meet the small loan needs of your community, which are underserved.
• Also identify your competitors and describe their strength or weakness in the market.
• Product line. Describe the loans you want to make. You should explain the advantages of your loans over those of competitor’s.
• Marketing and sales. Discuss your overall sales strategy, including your plans for growth. For example, you may hope to grow geographically, offering your loans to a larger community. Or you might hope to grow by offering additional types of loans to your current market.
• Financial projections. Based on your market analysis, you should forecast your projected finances for five-years out.

• Some money lenders have dipped into their retirement accounts, such as their IRAs and 401(k) accounts, to fund their loans. Experts encourage money lenders who do this to understand the risks that they are taking. For example, loans might not be repaid, in which case you could lose a large percentage of the loan amount. [3] X Research source
• If you seek funding from investors, then you will need to work closely with a lawyer to draft a prospectus to share with investors. State and federal laws tightly regulate how you advertise securities to potential investors. Your lawyer will need to be experienced in securities regulation.

• Generally, you will assess risk by gathering information about the loan applicant’s financial history. For example, you would want to look at their income, FICO score, and other debt load. [4] X Research source

• To find an experienced business lawyer, you can visit your state’s bar association website, which should run a referral program.
• You can research any attorney by visiting his or her website. Look for experience with business formation, as well as banking or lending experience. If you are starting a lending business for real estate, then look for an attorney who has real estate experience as well.

• You can purchase your domain name from various registrars. Search the internet for “where to purchase domain name” and look at the different companies that provide this service.

Registering Your Business

• To incorporate, you will have to file articles of incorporation with your state. Your attorney should be able to get them, or you can get them yourself from your Secretary of State.

• In addition to state licenses, you may need municipal or local licenses. You must contact your state business licenses office and search for applicable licenses or permits. The Small Business Administration has links to each state’s office at https://www.sba.gov/content/what-state-licenses-and-permits-does-your-business-need .

• Not every state requires that you register a “doing business as” name. You can check registration requirements with your Secretary of State office as well as with your county clerk’s office.

• You should check with your attorney whether or not you need to register the securities and which agency you need to register with.

• You can apply for an EIN online. This is the preferred method. [6] X Trustworthy Source Internal Revenue Service U.S. government agency in charge of managing the Federal Tax Code Go to source To start the application, visit the EIN Assistant at https://sa.www4.irs.gov/modiein/individual/index.jsp .
• You can also apply by mail or fax by printing off Form SS-4 available at http://www.irs.gov/pub/irs-pdf/fss4.pdf . To find out where to mail or fax your form, you should visit the IRS website at https://www.irs.gov/filing/where-to-file-your-taxes-for-form-ss-4 .

• Under federal law, specifically the Fair Debt Collection Practices Act, you are prohibited from harassing or abusing the customer that owes you money. [7] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source Also, you cannot use false, deceptive, or misleading means to collect any debt. [8] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source If you fail to obey federal law, you and your business could face stiff civil penalties. [9] X Trustworthy Source Federal Trade Commission Independent U.S. government agency focused on consumer protection Go to source
• Each state will also have laws prohibiting certain debt collection activities. For example, in Iowa, you are prohibited from making illegal threats or from coercing or attempting to coerce a customer into paying a debt. [10] X Research source

• To find a compliance professional, you can ask your lawyer for recommendations. Alternately, if you met anyone at a national conference or panel, you could contact them for a recommendation.

Launching Your Business

• Rent is often one of the largest expenses for a new business. Accordingly, you should budget and not spend more than you can afford.
• Try to negotiate a one- to two-year lease with an option to renew. Because you don’t know if your business will be successful or not, you shouldn’t sign an initial lease for longer than that.
• Find out what other expenses you might incur in addition to the rent. For example, you could have to pay for maintenance and repair, upkeep, and utilities.
• Negotiate some add-on clauses, such as a right to sublease or an exclusivity clause (which prevents a landlord from leasing to a direct competitor at the same location).

• Business tax identification number (or Social Security Number if sole proprietor)
• Business license
• Business name filing document
• Articles of incorporation with corporate officers listed (for a corporation)

• If you are lending money for real estate, you will need not only the promissory note but also the mortgage note. Lenders working in the real estate field also typically use other documents, such as Letters of Intent (LOI) and preliminary title reports. [13] X Research source You should ask your attorney or compliance professional about what other contracts are necessary.
• For more information on loan agreements, see Write a Loan Agreement.

• If you want to make a few loans to acquaintances or people in your neighborhood, you could rely on word of mouth. However, if you want to reach a larger market or grow more quickly, then you should consider advertising in newspapers or online.
• You should also consider advertising in the form of imprinting your company name on pens, paper, calendars, and other giveaway items.

Expert Q&A

• Some experts recommend that you lend locally, preferably within 100 miles of your physical location. [14] X Research source Thanks Helpful 0 Not Helpful 0
• Running a collateral-free loan is an added advantage to run a successful lending business. Thanks Helpful 25 Not Helpful 6
• You should not underestimate the amount of work it will take to start a money lending business. If you find it difficult to write a business plan, you might want to rethink your objectives. Thanks Helpful 14 Not Helpful 5

You Might Also Like

• ↑ https://www.profitableventure.com/starting-a-micro-money-lending-business/
• ↑ https://www.sba.gov/writing-business-plan
• ↑ https://www.investopedia.com/terms/l/loan.asp
• ↑ http://www.creditinfocenter.com/mortgage/guidelines.shtml
• ↑ https://www.sba.gov/business-guide/launch-your-business/register-your-business
• ↑ https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
• ↑ https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text
• ↑ http://www.nolo.com/legal-encyclopedia/iowa-fair-debt-collection-laws.html
• ↑ https://www.pacificprivatemoney.com/6-tips-for-a-successful-private-lending-practice/
• ↑ https://www.sba.gov/business-guide/manage-your-business/buy-assets-equipment
• ↑ http://www.fortunebuilders.com/becoming-private-money-lender-part-2-breaking-private-money-loan/

About This Article

To start a money lending business, you’ll need to draft a business plan and obtain the necessary licenses by completing the paperwork required by your state. Your business plan will need to include the types of loans you want to make, such as payday or mortgage, and strategies for how to grow your business. That way, you can attract potential investors, which is typically less risky than using your own savings. You should, however, work with an attorney experienced in securities to ensure you acquire your investments legally. Your lawyer can also help you apply for the needed licenses and register your business as a corporation, sole proprietorship, or whichever type of company you choose to be. For more advice from our Legal co-author, like how to advertise your new business, keep reading! Did this summary help you? Yes No

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How to start a small lending business

Table of Contents

What you’ll need for a small lending business

Funding , a business plan, know the industry , people skills , marketing skills , how to set up your small lending business, register your business, register for taxes, get authorisation from the fca, find insurance , how to organise your small lending business , business management , outline your services, business current account, keep track of your clients , how to market your lending business for success, business branding , business website , social media marketing , advertising , organise your lending finances with countingup.

If you’re interested in starting a small lending business, it can be a great way to earn money and become your own boss. Lending businesses allow you to help other people and small businesses with money needs while making money yourself. 

A small lending business would allow you to loan out smaller sums of money to those in need of funding. About 43% of small businesses apply for loans to support their business. Some of these small businesses struggle to secure funding and, as a result, suffer from poor cash flow. 

This shows that there is a market for small lending businesses. You could offer to fund individuals and small businesses that struggle to get approved at larger institutions. If you’re wondering how to start a small lending business, there are a few things you’ll need to know to get started. 

This guide will cover how to start a small lending business, including: 

• What you’ll need for a small lending business 
• How to organise your lending business
• How to market your lending business to find clients 

Knowing how to start a small lending business means knowing what you’ll need to run that business smoothly. 

The most important part of a lending business is the funding. You’ll need money to lend out to your clients, which you will eventually earn interest on. So, to start this business, you will need access to cash. This could come from your savings or from investors that finance your lending business. 

When sourcing financing for your business, consider how you can remain profitable. If you seek investors as a cash source, you will likely need to pay them back with interest. This can reduce your business profits. If you use your savings, you will need to examine how much you want to lend out and how quickly you can start earning money from these services. 

Once you secure a funding source, you can create a business plan to organise your objectives and long-term and short-term goals. By writing a plan for your business, you can understand your mission and work towards it. 

This plan could outline your lending intentions and target market . Who do you want to lend to? Will you focus on small businesses that are struggling to get funding? Will you approach your business with a social cause, such as lending to communities that are struggling? 

Plan how much money you’d like to lend out and determine your interest rate. This can help you understand how much money you can make from your business. 

You’ll also want to examine your startup costs . Though lending businesses don’t usually have many startup costs other than the funding itself, you may want to invest in a good computer, bookkeeping software, loan processing, and marketing. 

To succeed in your lending business, you’ll need to know about the lending industry. This will help you appear professional to clients and reduce risk. You will also want strong financial skills so that you can stay on top of your lending business.

Consider continuing your education in lending and financing by taking a course or attending seminars or conferences. This can teach you important information and trends within the industry. A strong grasp of the lending industry will help you avoid major business losses and lend to clients responsibly. 

An important part of how to start a small lending business is showing people what you can offer them. Consider how you can make yourself trustworthy as a lender. If you can clearly explain your services and how you help borrowers with financial opportunities, you can more easily convince people to use your services. 

Also, consider what you can offer that larger lenders cannot. As a small lending business, your interest rate may be higher than larger firms. But, you may offer better customer service and build stronger personal relationships. 

You’ll need marketing skills to grow your audience and to find clients. With a clear understanding of your target market, you can reach the right audience through digital and physical marketing tactics. Consider where you can find the right people and use your people skills to build relationships and convince potential clients of your services. 

Knowing what you’ll need to get started is just one part of how to start a small lending business. Once you have everything you need, you can set up that business to start earning money. There are a few steps you’ll need to follow. 

You can start by registering your lending business as either a sole trader or limited company . As a sole trader, you’ll be personally liable for your business, while a limited company is a separate legal entity from you. This means you are not personally liable for the business. 

You may also want to register a company name . A unique and memorable name can help build your brand identity and appear professional to clients.  

Next, you’ll need to register to pay your taxes with the HMRC . As a self-employed person, you’ll need to manage your own taxes . If you choose to register as a limited company, you’ll also need to pay corporation tax. Plus, if your lending business may bring in over £85,000 annually, you’ll need to register for VAT .

To run a lending business in the UK, you will need authorisation from the Financial Conduct Authority or FCA. This FCA is a financial regulatory body that operates separately from the UK government. As a lender, you’ll need to follow conduct principles outlined by the FCA. 

You’ll likely also want to read the FCA Perimeter Guidance Manual , so you know what the FCA expects of your business. You can apply for a limited or full permission for your company. In this application, you’ll have to show how you’ll conduct your lending business and deal with different challenges within operations. Apply for permissions through the FCA here .

You may want to seek insurance for your lending business. Consider how you can ensure that the money you lend gets returned to you in a timely manner. You can consider lender protection insurance to ensure that you still receive your money if something happens to the person or business you lend it to.  

You can also look into business insurance to help protect you from risk as a lender. 

Once you know how to start a small lending business, you’ll want to efficiently organise your business for success. A strong business organisation will help you keep track of your clients and finances to grow your business. It can also help ensure your business is profitable.

You can organise your lending operations through business management platforms like Google Workspace or Microsoft 365 . These platforms let you keep your contacts, calendars, and documents in one place so that you keep track of everything easily. 

As a lending service, you’ll also need to outline your lending process. Think about how you’ll collect, process, and organise your loans through bookkeeping . 

It will be important to outline your services and terms so you can appear professional and organised. First, determine your loan amounts and interest rates. Then, outline a payment schedule and conditions for each loan. Clearly stating these terms can help clients understand what you offer and what is expected of them when they take out a loan. 

With a lending company, financial management may be more important than in other small businesses. Though you aren’t required to open a business current account unless you register as a limited company, it can help you separate your business finances from your personal ones. 

It will also help you to build credit and streamline your finances. 

The Countingup business account and app lets you easily organise your business account. It automatically categorises business expenses and track your cash flow. It can also automatically update spreadsheets to simplify your lending finances. 

As a lender, you will want to keep your client base and lending amounts organised. This will help you know when a payment is due from a client and when payments are running late. To earn money from lending, you’ll need to ensure that your clients make their payments on time and as agreed. You can learn more about chasing up late payments here . 

Knowing how to start a small lending business means you’ll need to know how to find clients for that business. Marketing your business will be important to its success. 

You can start marketing your business by building a brand identity that reaches your target audience . Your brand is a design and tone that represents your business and makes it memorable. If you remain consistent with your brand, you can build awareness and reach a larger audience. 

You can use design platforms like Canva to create marketing materials for your business, such as logos to business cards . 

A business website will be important to the marketing of your small business. Having a website can make your business more accessible to interested people. If you make the website easy to navigate and consistent with your business brand, potential customers can use it to learn more about your business. 

Make sure your lending business website has your company name, contact information, and services outlined clearly. You can find a website designer to build your website for you, or you can use a platform like Wix , Squarespace , or WordPress to build your own. 

A great way to reach your audience is through social media marketing. If you create profiles and post regularly to platforms like Facebook , LinkedIn, and Twitter, you can build your outreach and find potential clients. 

LinkedIn might be a great platform to focus on for marketing if you want to lend to small businesses. You could also consider posting finance and lending tips to a YouTube channel to appear knowledgeable to potential clients. 

Make sure each of your social media pages is consistent with one another. You can add your business logo and website URL each page to make your business accessible to potential clients. Give yourself a schedule and list content ideas to maintain regular engagement with the platforms. 

Apart from growing your audience through digital marketing, you can create an advertising budget for your lending business. Advertising in local newspapers and magazines will help you reach small businesses nearby that may need funding. 

You can also look for online opportunities for advertising that will reach the people you want to lend to. 

Email newsletters are another great way to spread your business services and regularly update potential clients. These newsletters are easy to subscribe to from your website. Overall, using your marketing skills to grow and engage with your audience will help you find your first lending clients. 

Once you get your small lending business up and running, managing your finances will be crucial to your success.. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here .

• Counting Up on Facebook
• Counting Up on Twitter
• Counting Up on LinkedIn

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The Bottom Line

• Personal Loans

How to Start a Personal Loan Business

Before you start a moneylender business, learn more about what’s involved

If you’re hoping to start a business , one of the most profitable is offering personal loans to others. However, getting the startup cash and investors required can be challenging.

Before you decide to start a personal loan business, it’s important to understand the ins and outs and be prepared for potential setbacks.

Key Takeaways

• A personal loan business can be flexible and profitable.
• You need investors to back a personal loan business, and it can be challenging to find them.
• It’s important to prepare ahead of time with paperwork, including loan documents.
• Federal, state, and local laws can make starting a personal loan business challenging, and you should review necessary information before moving forward.

Decide Whether a Personal Loan Business Is Right for You

Before you move forward with a personal loan business, you need to decide if it’s the right path for you. There are different potential ways to move forward with a personal loan business. Some potential options include:

• Your own money : You lend your own money to others. You can choose to provide secured loans or unsecured loans . However, you need to have a large amount of capital to get started, since you’re using your own money to move forward. In this case, though, you keep all the interest paid on the loan and can charge what fees you wish.
• Investor money : With this type of business, investors provide you with the funds to make loans. The investors receive the interest from the payments, and you receive compensation in the form of a loan fee charge at origination.
• Peer-to-peer (P2P) lending : Rather than directly lending money, you provide the means to connect borrowers and lenders . You might do it through an app or website. You take a cut of the deal but aren’t putting up your own money to get started.

A personal loan business can be profitable since you have the chance to earn money upfront from origination and administration fees. Plus, depending on how you set up your business, you might be able to benefit from the interest earned on repayments .

On the other hand, though, you have to be prepared to shoulder some of the risks. If a borrower misses payments or defaults , you could lose money—especially if you’re lending out your own money.

Don’t forget to consider the market potential as well. Loans are popular, and it’s possible to find customers all over the world. Even so, the industry has slowed in recent years, and there are concerns that increased scrutiny for moneylenders could lead to more challenges for those who want to start a personal loan business.

Pros and Cons of a Personal Loan Business

Potential for good profits, including upfront cash flow from charging fees

Flexible business model that can be managed from home if you choose

Customers available from a variety of markets, since many people need loans

Regulations can differ at the federal, state, and local levels, and it’s hard to predict how you need to comply.

It can be difficult to get enough capital to start, whether you use your own money or look for investors.

Growth in the installment loan industry has been slowing in the last few years.

Make sure to carefully consider the pros and cons of a personal loan business before you get started. Realize that regulations and the need for capital can make this a challenging business, even if you have the potential to make a good profit.

Don’t forget that heavy regulation at various levels of government can regulate how you collect interest, who you can lend to, and other aspects of personal loans. Working through the different regulations can be challenging, and it’s important to remember that financial services come with a lot of red tape. In fact, it’s important to note that there’s no one-size-fits-all approach to a moneylender business. You probably won’t be able to take one business template from one place and apply it to the same loan business in another location.

Next, you need to create a business plan . Unless you’re using your own money to fund the loans you make, you’ll need investors and other backers. Most of them aren’t likely to provide you with the money you need to get started unless you have a good business plan.

Some of the main elements of a business plan include the following:

• Executive summary : This is the overview of your business plan. It provides a way for investors and others to quickly understand the basics of your idea and how you expect to make money. It should be the last thing you write, even though it will be at the beginning of your overall plan.
• Business summary : Describe your business in this section. It should be an overview of what you hope to accomplish with your business and your goals. Key people in your company should be recognized here, along with their skills and what they contribute to the success of your business.
• Products : Be clear about what you’re providing and how you plan to deliver. Make sure you’re clear about the types of loans you’ll provide. This can include whether you plan to focus on microlending , traditional personal installment loans , cash advances , or some other type of loan . You can also share whether you plan to provide options such as allowing co-signers or accepting collateral .
• Market analysis : Next, you need to provide an analysis of your target market and potential demand. You’ll need to back this up with research and have an analysis of what type of growth you can reasonably expect, in addition to potential challenges.
• Competitive analysis : Take a look at your likely competitors in the space. You should be able to compare their strengths and weaknesses to your own and provide an overview of how your product and business will be advantageous compared to your competitors.
• Marketing plan : Provide a marketing plan . How will you reach your target market? What channels will you use, and do you have any promotional strategies? Flesh out a plan to show how you will reach customers and convert them.
• Operations plan : This section is all about logistics . Where will you be located? Will you have offices or operate online? Do you have special equipment or people who can be used to make this business a success?
• Financial plan : Don’t forget to lay out the numbers. In general, you should plan to have projects for startup costs and the type of investment you’ll need. Provide profit and loss estimates, and detail your expected cash flow . You should be able to estimate three to five years.
• Appendix : If you have any supplementary materials and documentation, it should go in this section of your business plan.

Once you have your business plan and a roadmap for the future, you need to form your legal entity. Decide whether you should be a sole proprietor or if it makes sense for you to form a limited liability company (LLC) or some other partnership . You can also form a corporation . An accountant or a business attorney can help you figure out what type of structure makes sense for you.

If you think you’ll hire others to work in the business, or if you have investors who might want to be partners, you’ll need to keep that in mind as you form a legal business entity. Depending on your state, you might need to file articles of organization and register your business with a city or state office.

You’ll need an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) as you move forward. This will be used when you file your business or partnership tax returns . You can go to the IRS website and get an EIN and register your business within a matter of minutes. It’s also possible to complete this step by mail or fax.

One of the most challenging parts of starting a personal loan business is making sure you have the financing you need. If you’re going to loan money, you need a significant amount of capital.

If you’re using investors’ funds, you’ll need to build relationships and convince others to provide you with capital to lend to others. You’ll need to have agreements in place with your backers so that they know how much they can expect, including what types of returns they’re likely to receive.

All of this can require a lot of expense as you consult with lawyers and make sure you’re in compliance with federal, state, and local regulations.

Get the Required Licenses and Permits

Next, you need to figure out what licenses you need to operate a lending business. You might need permits as well, especially if you’re occupying a building. States, counties, and cities might have their own rules. These rules will be based on whether you operate out of your home or another location. Make sure you understand the requirements before you move forward and get the appropriate paperwork filed to operate legally.

Remember, too, that you might have to get certain licenses for financial services, depending on where you operate. Taking the appropriate tests and paying for the licenses can be costly, so evaluate whether this is something you want to pursue.

Don’t forget to set up business accounting. You should have a separate system from your personal finances. You’ll need bookkeeping and payroll for employees. You also need a way to keep track of when borrowers make payments and how much of each payment should go toward the principal and how much should go toward interest. And, if you have investors, your accounting should also take into account what’s going to them.

As a moneylender, you need business insurance to protect you if too many borrowers default or something else happens. Often, you might need business insurance to protect you in the case of lawsuits as well. If you have a building, you’ll need insurance to protect your premises. Don’t forget about workers’ compensation as well. There are many different types of business insurance, and you need to make sure you’re paying for policies that fit your needs and can help protect your assets.

What to Expect When Opening a Personal Loan Business

When you open a personal loan business, you should be prepared to work long hours and be ready to market yourself and your business. It’s also important to make sure you have enough capital available to fulfill the loans you plan to make to others, as well as meet all federal, state, and local regulatory requirements.

Understand how to put processes in place when deciding whom to lend to. Check with local regulations on how to evaluate someone’s creditworthiness and the types of agreements you need to have borrowers sign. Don’t forget that some states have caps on the interest you can charge on loans, so you should know how to set annual percentage rates (APRs) (which include origination and other fees) to be compliant.

You also need to set up payment systems to collect payment (plus interest) from your borrowers. This can include online systems, mail-in, or other arrangements. If you plan to automatically deduct from accounts, you need to have the right agreements in place and get permission for auto-drafts from bank accounts. All of this needs to be done with regulation in mind and best practices for security. You must be prepared to issue account statements to each borrower, showing them how much of each payment is going to the principal and how much is going to interest.

Don’t forget to create a collections policy. You need to have an idea of how to pursue nonpayment if someone falls behind. Once again, it’s important to make sure that how you approach collections is according to federal, state, and local regulations on personal lending businesses.

You should also have insurance and investors prepared to help you manage your business finances if you have people defaulting. To reduce the chances of default, you might need to consider how you will vet borrowers, including running credit checks and deciding what minimum credit score you’ll require.

Additionally, you’ll need to have policies for handling sensitive personal finance information. You’ll likely have to collect information regarding Social Security numbers (SSNs) , bank accounts, and other sensitive matters. You’ll need a way to protect your database and have protocols in place for keeping personal data secure.

How Do I Start a Private Lending Business?

In many cases, you need access to a large amount of capital to start a private lending business. This can come from your own finances, or you might need to get money from investors. You also need to meet specific regulations in your state and get the appropriate licenses, insurance, and permits to start a lending business.

How Does a Moneylender Business Work?

In a moneylender business, a lender provides cash to a borrower. The borrower pays interest, and they might even pay origination fees and other costs. As the borrower repays the loan, more capital is available for other loans, and the lender makes a profit from the interest they receive.

How Do Loan Providers Make Money?

Loan providers usually make money by charging interest on loans. The interest charge is normally part of the repayment process, and how the lender is compensated. Loan providers might also make money from fees they charge, including origination and administrative fees.

A personal loan business can be a profitable way to earn money. It’s relatively easy to manage, as long as you have a good system for keeping track of the progress of loan repayment. However, you need access to capital and need to be prepared to go through the regulatory process. Also, many loan businesses need good legal representation to help them navigate laws and regulations, in addition to drafting loan agreements and other documents.

Before you decide to lend money to others, carefully consider your situation and whether it makes sense for you to get involved with a personal loan business.

This article represents general guidance on setting up a personal lending business. Federal, state, and local regulations affect how a personal loan business works in each location, and you should check requirements before starting a new lending business. Consider working with an attorney or other professional to navigate the extensive regulation in the financial services industry.

IBISWorld. “ Installment Lenders Industry in the U.S.—Market Research Report .”

Internal Revenue Service. “ Apply for an Employer Identification Number (EIN) Online .”

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Loan Officer Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped thousands of loan officers develop business plans to grow their businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a loan officer business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Loan Officer Business Plan?

A business plan provides a snapshot of your loan business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Loan Officer

If you’re looking to grow your existing loan business, you need a business plan. A business plan will plan out the growth of your loan business in order to improve your chances of success. Your loan business plan is a living document that should be updated annually as your company grows and changes.

Finish Your Business Plan Today!

If you want to grow your loan officer business, you need a business plan. Below are links to each section of your loan officer business plan template:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

In it you must provide an overview of each of the sections of your plan. For example, give a brief overview of the loan industry. Discuss the type of loan business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of loan business you are operating.

For example, you might operate one of the following types of loan businesses:

• Commercial Loan Officer : this type of loan business focuses on arranging business loans.
• Consumer Loan Officer: this type of business focuses on providing loans for things such as vehicles.
• Mortgage Loan Officer: this type of loan obtains loans for consumer to purchase real estate.

In addition to explaining the type of loan business you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, number of positive reviews, dollar value of loans arranged, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the loan industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the loan industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your loan business plan:

• How big is the loan industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your loan business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your loan officer business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: parents, students, professionals, businesses, couples, families, prospective home buyers, prospective car buyers, contractors, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of loan business you operate. Clearly, someone interested in purchasing a new car would respond to different marketing promotions than a business seeking equipment financing, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most loan businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other loan businesses.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes commercial banks, online loan brokers, etc. You need to mention such competition as well.

With regards to direct competition, you want to describe the other loan businesses with which you compete. Most likely, your direct competitors will be loan officers located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What types of loans do they specialize in?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide higher value loans?
• Will you offer lower interest rates on loans?
• Will you provide better customer service?
• Will you offer a wider variety of loan options?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a loan officer business plan, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of loan company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to loans, will you provide insurance, financial advisory, or real estate services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.

Place : Place refers to the location of your loan company. Document your location and mention how the location will impact your success. For example, is your loan business located near a real estate brokerage, or car dealership, etc. Discuss how your location might be the ideal location for your customers.

Promotions : The final part of your loan officer marketing plan is the promotions section. This is perhaps the most important section of your plan. Here you will document how you will drive customers to your website and/or location(s). The following are some promotional methods you might consider:

• Advertising in local papers and magazines
• Reaching out to local websites
• Social media marketing
• Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your loan business, including processing loan applications, arranging signings, marketing your business, paperwork, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to arrange your 100 th loan, or when you hope to reach $X in revenue. It could also be when you expect to expand your loan business to a new city.  

Management Team

To demonstrate your loan business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in managing loan businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience as a loan officer or success being a local bank or credit union manager.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you work on commission, or on a fee for services model? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your loan business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a loan business:

• Location build-out including design fees, construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or outline your strategic partnerships with local realtors and lenders.  

Putting together a business plan for your loan officer business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the loan industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful loan business.  

Loan Officer Business Plan FAQs

What is the easiest way to complete my loan officer business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Loan Officer Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of loan officer business you are operating and the status; for example, are you a startup, do you have a loan officer business that you would like to grow, or are you operating a chain of loan officer businesses?

Don’t you wish there was a faster, easier way to finish your Loan Officer business plan?

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.

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Every business owner can benefit from writing a business plan, including those in the early stages of launching a business . A well-crafted business plan communicates the business’s strategy for growth to key leaders and investors. It’s also an important step to getting a business loan since many lenders require it.

Let’s walk through the steps and elements of writing your ideal business plan.

Key takeaways

• A business plan outlines how you plan to bring products or services to market
• Many lenders require a business plan be included with a loan application
• You can choose to write a lean or traditional business plan
• It covers everything from market research to your marketing and financial plan.

What is a business plan?

A business plan is a document that outlines a business’s strategy for bringing a product or service to market. It describes the company, product idea and goals or steps that the business will take to achieve growth. The document includes multiple sections that provide insight into each part of the strategy.

The business plan can be a simple document called a lean business plan or a more detailed traditional business plan. The lean business plan covers the basics of the company, product, target customers and how it will get revenue. It may only be one page with short descriptions for each part.

The traditional business plan includes more depth on the goals, measurements, research and marketing strategies to get the business where it’s going. Here are key differences in the information written for each type of business plan:

Although there’s no one-size-fits-all approach, follow these steps to create a strong business plan.

Write an executive summary

An executive summary is the introduction to a business plan, giving the key details about your business model and the product or service you’re offering. While there’s no strict formula for writing this section, you should include all the relevant details that you’d want a key partner or investor to know.

It should describe your product or service idea, target market and key objectives for growth within the next few years. It may also summarize your marketing and sources of revenue or funding.

You can adjust what to include based on the exact business you’re starting and its business model. Most business plans keep the executive summary to one to two pages.

Create a company description

The company description should overview important details about your company. It can state your company’s name, location and type of entity as well as describe its history. It should also clearly define the vision that you have for your company’s future in the form of a mission or vision statement.

You may also outline the structure for managing the business, listing key roles and responsibilities and the people filling those roles. Depending on the details you included in the executive summary, you might include information about your product or service.

Describe your value proposition

The value proposition is your chance to pitch what makes your business stand out. It identifies the customer’s problem or gap in the market for the product or service you’re offering. It then goes into detail about how your business will solve the problem.

The value proposition can also explain major barriers that customers have before making a decision and what your business will do to break through those barriers. It shows leaders and investors that you have a thoughtful purpose behind the business you’re creating.

State your business goals

The path to achieving success starts with knowing what success looks like. Many business plans state its main objectives in the company description. Others describe those goals in a separate part of the business plan to dive deeper into the specific goals.

You can also include key measurements you’ll use to gauge whether your business is achieving its goals. You would then use these goals in other business planning documents, further breaking them down into defined short-term steps that ladder up to the larger goals.

Outline your product and service

Next, you want to dive into the main product or service that your business is offering. Explain what the product is, how it works and the benefits that it brings to customers. If you’re planning to make multiple products, you can include a description of each product line. Show how this product or service is set apart from similar products from competitors.

You can also use this section to show how the product or service is produced, including cost of supplies and the price at which you plan to sell. Let the investors and stakeholders know if you have a trademark or patent for the products you’re creating.

Give a summary of market research

Next comes market research, the part of the plan where you do your due diligence to gather information and understand your target customers and competitors. First, you want to understand your target customers’ needs and any barriers they might have to buying your product.

You want to look for information about their demographics and how they might respond to the product you’re offering. This information will help you when designing your product and marketing it in a way that resonates with customers.

Then, you can look at the economy around your product, such as average pricing and sales revenue. This also includes research about your competitors, the market share that they hold and the barriers to entering your market. This section may include data from data research companies, surveys, focus groups and interviews.

According to the U.S. Small Business Administration , the questions you’re trying to answer include:

• Market size, or how many people may want to buy your product
• What people are willing to pay for your product
• Similar products already available
• Who your competitors are
• How your industry is doing
• Typical revenue gained by small businesses in your industry

Summarize a marketing strategy

Once you’ve clearly defined your product and who you’re selling to, you can come up with a strategy for how you’ll reach and sell to customers. In this section, you’ll include the different marketing channels you’ll use to promote your products and services.

These may include direct mailers, social media, traditional or online advertising or media events. The exact channels you use will depend on where you can easily find your target customers.

You can also describe the key messaging that you plan to use during marketing, which will pinpoint the value that it offers to customers. The marketing plan should also include the cost of marketing to different channels and your marketing budget. You can then outline the marketing goals and measurements you’ll use to see if you’re meeting those goals.

Create a logistics and operations plan

The logistics and operations section of your business plan is a detailed description of how your business will bring products and services to market. It explains how the business will run on a day-to-day basis. It should highlight your company’s management structure, give an overview of processes and describe the workflow from end to end. It can also include data on how many products you can make or how long it will take to make products or offer services.

Create a financial plan

Now that you’ve laid out the research, goals and planning, you can use that information to forecast revenue and build a financial plan. Use any past revenue or sales history as a starting point. Then, refer to your company’s recent growth and goals to calculate future financial growth.

If you’re a startup , you can use market research to estimate revenue for a startup in your industry. You can either forecast revenue manually or find software that projects revenue for you.

In your financial plan, you also want to create and track your business budget . You’ll track your estimated and actual revenue, updating regularly to keep the revenue forecast accurate and realistic. Next, you’ll list all expenses and their amounts, including one-time, variable, fixed or seasonal expenses. Here are some examples of different business expenses:

• One-time or capital expenses: Equipment, real estate, furniture, commercial vehicles, business licenses
• Variable expenses: Inventory, utilities, fuel, office supplies, shipping services, card processing fees
• Fixed expenses: Employee salaries and benefits, software, web hosting, office or equipment leases, business loan repayments

Business plan resources

Writing your business plan will take more than putting pen to paper. Try these resources to help you gather data, set up your finances and more:

• Business plan templates. Creating a business plan for the first time? Learn by looking up examples of other business plans or templates like these from Smartsheet .
• Software for accounting and financial planning. Many small businesses use Quickbooks, Xero or Netsuite to track revenue and expenses. These may also forecast revenue based on sales history.
• Business loan resources. To cover your funding needs, think through the types of business loans that would best serve your business. Once you’ve landed on a loan, compare features and interest rates to help you make a decision.
• Survey tools. For in-depth market research, you can build a survey and send to your target customers through a data research company like GWI.

Small business mentoring

Experienced mentors can guide you to making effective business decisions and unlock new potential for growth. Where to find small business mentors:

• SBA. You can find resources and free or low-cost mentors through the SBA’s local assistance tool .
• Small Business Development Centers. SBDCs provide specialized training programs in your local area covering specialized topics like marketing, data research and business management.
• Community Development Financial Institutions. CDFIs   are financial organizations like banks and credit unions that are built to develop the community. Alongside banking and lending services, CDFIs offer training programs and resources.
• SCORE. SCORE is an organization that partners with the SBA to bring resources to small business owners. Mentorship is at the core of what the organization does, and it can match you with a local mentor through its online locator tool.
• Local Chamber of Commerce. These local organizations are known for supporting business networking. They may help you find a mentorship program, or you may build a relationship with another successful entrepreneur through networking events.
• Nonprofit organizations. Some nonprofit organizations are dedicated to supporting small business owners with funding, trainings and mentorship programs. These are typically local programs. For example, NYPACE is a nonprofit that offers free consulting to underserved entrepreneurs in New York.

Bottom line

Your business plan should outline key information about your company, products and the strategy for getting those products in the hands of your customers. Every business plan looks different, but there is essential information to include in every plan, such as who your target customer is and your expected revenue. The business plan serves to help you get business funding and outline exact goals and steps to growing your company.

Frequently asked questions

Do i need a business plan to apply for a business loan, how do i write a simple business plan, what basic items should be included in a business plan.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated April 17, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

Free business plan template

Download a free SBA-approved business plan template built for small businesses and startups.

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One-page plan template

Download a free one-page plan template to write a useful business plan in as little as 30-minutes.

Sample business plan library

Explore over 500 real-world business plan examples from a wide variety of industries.

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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Beware of scams promising to reduce student debt by enrolling in loan forgiveness programs

Traditionally, this is the time of year when aspiring graduates plan their walk across the stage to claim their diplomas. Shortly after that, the student loan repayment process begins.  

In September 2023, interest began to accrue again, and in October, minimum payments resumed. As of March 2024, the Biden administration has announced that over $6 billion of student loan debt will be forgiven for over 70,000 workers in the public service sector such as teachers. nurses, firefighters, and social workers. 

Better Business Bureau encourages graduates to carefully research trustworthy sources related to federal repayment plans before giving personal information.  

Watch out for companies promising to reduce debt by lowering payments through enrollment in student loan forgiveness or other programs. They may also falsely promise to apply monthly payments to consumers’ student loans and to improve credit scores — all you have to do is pay a small fee so they can negotiate with the lender on your behalf. In another version, dishonest collectors claim they can save money by consolidating loans — if a minimal fee is paid. Please keep your personal information private and never give it to an unsolicited source.  

Due to the uptick in student loan forgiveness scams, the FTC has sent more than $4.1 million in refunds to borrowers who lost money to scammers. 

Luckily, the U.S. Department of Education has provided borrowers with the following Do’s and Don’ts as they apply for student loan debt relief.  

DO  create an FSA ID at  StudentAid.gov . You will not need it for the debt relief application, but having an FSA ID allows easy access to accurate information on your loan. It also makes sure FSA can contact you directly, helping you equip yourself against scammers trying to contact you. Log in to your current account on StudentAid.gov and keep your contact info updated.

DO  make sure your loan servicer has your most current contact information. If you don’t know who your servicer is, you can log into  StudentAid.gov  and see your servicer(s) in your account. 

DO  report scammers to the Federal Trade Commission by visiting  reportfraud.ftc.gov .  

DON’T  pay anyone who contacts you with promises of debt relief or loan forgiveness.  YOU DO NOT NEED TO PAY ANYONE TO OBTAIN DEBT RELIEF.   The application will be free and easy to use when it opens in October. 

DON’T  reveal your FSA ID, account information, or password to anyone who contacts you. The Department of Education and your federal student loan servicer will never call or email you asking for this information. 

DON’T  ever give personal or financial information to an unfamiliar caller. When in doubt, hang up and call your student loan servicer directly. You can find your federal student loan servicer’s contact information at Studentaid.gov/manage-loans/repayment/servicers . 

DON’T  refinance your federal student loans unless you know the risks. If you refinance federal student loans eligible for debt relief into private loans, you will lose out on the one-time debt relief and flexible repayment plans for federal loans. 

How to protect yourself from student loan scammers:  

• Research the lender.   Visit  BBB.org  to read business profiles and check out companies before working with them.  The FTC has  consumer education  related to student loan debt relief scams.  

• Report it. If you have been a victim of a suspected scam, report it at  BBB.org/ScamTracker.  

• Empty promises lead to an empty wallet and more debt.  Only scammers promise fast loan forgiveness. Scammers often pretend to be affiliated with the government.  Scammers also promise loan forgiveness for a fee. Never pay a fee upfront for help.  Never share sensitive information, such as your FSA ID. 

• Find a reliable source.  Consumers can apply for loan deferments, forbearance, repayment, and forgiveness, or discharge programs directly through the U.S. Department of Education or their loan servicer at no cost and do not require a third party.

Visit  StudentAid.gov  for federal student loan repayment options. Student loans can be forgiven only under specific circumstances, so contact your lender directly to see if any options are available to you. If you’ve spotted a student loan forgiveness scam (whether or not you’ve lost money), report it to  BBB.org/ScamTracker and the FTC at ReportFraud.ftc.gov . Your report can help others avoid falling victim to scams. 

Rick Walz is the President and CEO of the Better Business Bureau serving Northern Indiana, which serves 23 counties. Contact the BBB at 800-552-4631 or visit  www.bbb.org .

Halal mortgages in federal budget about 'being equal' for Muslims, providers say

Government indicated that it's 'exploring new measures to expand access'.

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Federal budget references to mortgage products aimed at Canadian Muslims have members of the community celebrating, along with the mortgage providers that look to serve them, despite a lack of detail from the government on what is to come.

In Tuesday's budget documents, the federal government indicated that it's "exploring new measures to expand access" to financing methods such as "halal mortgages."

The budget provided few details about the plan, other than to say the government had been consulting "financial services providers and diverse communities" and that an update would come in the 2024 fall economic statement. Despite no specifics, it was a welcome addition to the budget for the Muslim community.

"It was very happy news for me," said Abdullah Mohiuddin, who has already taken out an Islamic, or halal, mortgage to purchase a home in the Edmonton area. He said he welcomed the government's announcement that it would be finding a way to increase access to a financial product he believes his community needs.

Several firms in various Canadian provinces offer halal mortgages. Halal is an Arabic word that translates in English to "permitted" or "allowed" under Islamic law.

These mortgages are deliberately structured to adhere to both Canadian law and the belief systems of many Muslims. Interest, which is referred to in many Islamic texts as " riba ," is forbidden.

Although interest isn't charged, there are still costs associated with halal mortgages. In many cases, the costs are higher than those associated with conventional mortgages, and the mortgages are often not available at the branches of mainstream financial institutions.

"It seems like it's a little bit expensive," Mohiuddin said, adding he believes the lack of established legal definitions for a halal mortgage in Canada is behind the higher costs. 

Announcement boosts credibility

Muslims looking for a halal mortgage are still going to be paying carrying costs for a loan to purchase their home.

Providers in the industry said these costs can be higher because while there is demand, there are fewer providers — and some halal mortgage providers are unable to foreclose due to religious restrictions, which can increase what some financiers assess as risk.

• Budget 2024 is pitching a long list of new laws
• Interest-free, but not without charges: Islamic mortgages hit the Canadian housing market

That could be changing with the federal announcement, say executives with Islamic mortgage provider Eqraz Inc., based in Oakville, Ont. The company has said there's already a positive impact just from the five sentences in the federal budget regarding halal mortgages.

"I'm already seeing traction in our favour," said Zuhair Naqvi, the firm's founder and CEO, adding he believes that a mention in high-profile federal policies leads to credibility.

"It allows me to go to the banks and the lenders and powers that be and tell them, 'Look, guys, the government is supporting this, so please don't be worried or anxious about participating in this,'" Naqvi said.

Mortgage providers who have worked with Eqraz echo his sentiment. "With the federal government coming in, this really encourages myself and excites me. And my phone is ringing off the hook," said Naveed Malik, a mortgage agent with Dominion Lending Centres.

• It's not just a label for meat: halal investments target Islamic customers

Naqvi said this is not about elevating Islamic mortgages above non-religious financial products or those that target members of other faiths.

"Halal mortgages do not provide a privilege to us," Naqvi said, adding it's about "being equal to non-Muslims."

Fewer providers, higher costs

Malik said he estimates that the cost of halal mortgages is currently about four per cent higher than a conventional mortgage.

Islamic mortgage companies have previously speculated that with wider availability, costs could drop as more providers compete for business, and risk is lessened with a wider pool of lenders.

Many of the discrepancies in cost are due to what Islamic finance experts and industry players say are not just legal differences but basic structural anomalies in the mortgage.

Some types of arrangements more closely resemble a "rent-to-own" system, where the mortgage provider is also an owner of the home.

• Halal financing program helping Alberta Muslims become homeowners
• Al Rashid Mosque cuts ties with Edmonton-based halal mortgage company

There are also some agreements where fees are charged instead of standard interest payments.

However, the lack of legal definitions specific to the interest-free nature of Islamic mortgages has often meant many mortgage insurance providers do not insure them — in particular because each halal provider may structure their mortgage differently, and uninsured mortgages can sometimes be more expensive.

Halal mortgages help fill the gap for Muslim homebuyers

A 2010 report for the Canada Mortgage and Housing Corporation  said Islamic financial products should not "present any particular difficulties" under Canadian accounting standards, but years later they are still far from widespread.

There have been legal issues, such as who is registered on land titles and whether a rent-to-own contract is subject to landlord and tenant legislation in various provinces.

ABOUT THE AUTHOR

Senior Reporter

Anis Heydari is a senior business reporter at CBC News. Prior to that, he was on the founding team of CBC Radio's "The Cost of Living" and has also reported for NPR's "The Indicator from Planet Money." He's lived and worked in Edmonton, Edinburgh, southwestern Ontario and Toronto, and is currently based in Calgary. Email him at [email protected].

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• Best identity theft protection
• Best overall
• Best for complete coverage
• Best for value
• Best for families
• Best for flexibility
• Best for basic coverage

How we review identity theft protection services

Do you need identity theft protection here are the best identity theft protection services worth considering in 2024..

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The best identity theft protection service is the one that meets your needs at a price you can afford. For example, if your identity has been stolen before, you're more likely to be targeted again. You may need to arm yourself more heavily than you would otherwise with features like dark web monitoring, public records monitoring, and identity theft recovery.

On the other hand, if you're concerned about your children, consider looking for identity protection that offers features for children. Most identity theft protection services in our guide provide features specifically for children, like Aura's hate speech monitoring or IdentityForce's Childwatch, which includes social media monitoring and Child Credit Activity Monitoring.

Our top picks for the best identity theft protection

Best overall: norton 360 with lifelock select, best for families: aura – all-in-one id theft protection, best for complete coverage: identityforce ultrasecure+credit.

• Most well-rounded: IDShield 3 Bureau Individual Plan
• Most flexibility: Identity Guard

Best for basic coverage: PrivacyGuard Identity Protection

How we rank identity theft protection services »

Compare the top identity theft protection services

The best identity theft protection is a service that meets your needs at the price you're willing to pay. While our system for rating these services is more nuanced than this, at the core of our rating system is the balance between the features provided and the cost of those features. 

Here are the best identity theft protection services as picked by Business Insider editors in 2024. 

Cost:  $17.99 monthly or $179.99 annually

LifeLock is an identity theft protection service operated by Norton, one of the leading brands in cybersecurity. Unfortunately, LifeLock falls short compared to the other products included in this guide. However, the service gains a lot of value when paired with Norton 360, Norton's cybersecurity protection plan. 

Norton 360 with LifeLock offers three plans: Standard, Advantage, and Ultimate Plus. The Standard plan offers the most value for its price and a sizable first-year discount. However, for more serious identity protection, it may be worth upgrading to one of the advanced plans. 

You can read our LifeLock review here. 

Cost:  $29.95 monthly or $299.50 annually

Ultra Secure+Credit is a product of TransUnion, but the +Credit plan also covers Experian and Equifax. It offers broad monitoring capability, including social media accounts, mobile device scanning, and dark web data analysis. It can also alert you of suspicious activity in your banking and investment accounts, in addition to credit-related fraud alerts.

On top of monitoring, Ultra Secure+Credit also offers cybersecurity features such as an online vault for storing sensitive digital documents and a VPN. Ultra Secure+Credit also offers an entry-level plan with most of the same features apart from credit monitoring, which is a good fit for anyone who already has that base covered.

While standard pricing is $29.95 a month, you can rummage around online for IdentityForce discounts. In the past, we've found lower prices by Googling "IdentityForce discount."

You can find our IdentityForce review here.

Best for value: IDShield 3 Bureau Individual Plan

Cost:  Starting at $14.95/month

IDShield offers comparable protection to Ultra Secure+Credit at a lower price if you're paying monthly. You'll get all the essentials like three-bureau credit monitoring, alerts, and various cybersecurity and device protection tools. The few features IDShield lacks (like junk mail removal) aren't essential, so going without them is a reasonable tradeoff if cost is a priority.

One negative of IDShield is that it tends to get lower marks for its interface; if that deters you from using the security features, then whatever you save in monthly fees is nullified. IDShield is a well-rounded plan, but you should test it out with the 30-day free trial.

You can find our IDShield review here.

Cost:  $15 monthly or $144 annually

Aura provides fewer monitoring services than Ultra Secure+Credit and IDShield — it doesn't include social media, for example. It still offers well-rounded protection with monitoring of all three credit bureaus and the standard security tools, as well as email aliases to reduce spam and exposure to data breaches.

Aura All-In-One shines brightest with its couple and family plans, which provide the same protections for additional members (children or adults) at a heavily discounted cost per person. Aura's family plan also offers parental controls for mobile devices. 

You can find our Aura review here.

Best for flexibility: Identity Guard

Cost: $8.99 to $29.99 monthly for individuals, $14.99 to $39.99 monthly for families

Owned by Aura, Identity Guard has three core plans: Value, Total, and Ultra. With a family version for each of these tiers, Identity Guard has six plans overall. Even without the annual discounts applied, Identity Guard's Value plan is the cheapest service on this list. Its more expensive plans are still competitively priced compared to other services on this list, though you'll get a much better deal if you commit to an annual plan. 

One thing to note is that Identity Guard reserves its White Glove fraud resolution service for its Ultra plan, significantly reducing the utility of the Value and Total plans.

You can find our Identity Guard review here. 

Cost: $9.99 per month

PrivacyGuard has some gaps in its identity theft protection . Notably, its credit monitoring feature is a completely separate plan from its identity theft coverage unless you purchase the most expensive bundle. However, we're just recommending the identity protection service alone, as you can fill its credit monitoring gap using other tools that are available for free.

PrivacyGuard provides many services that are harder to replicate without paying, like dark web scanning and public records monitoring at lower prices than its competitors. You'll also get tools to secure your browser and keyboard. PrivacyGuard also provides bank account and credit card monitoring, which are surprisingly scarce features among identity protection services.

You can find our PrivacyGuard review here. 

Identity theft protection cost

The monthly cost of the identity protection services on this list ranges from $12 to $29.95 for their individual plans, though you can find services with prices outside this range on either end. Some of these services will offer family plans at a discounted rate.

Protecting your identity and other sensitive personal information is like protecting your home against fire. Most houses have fire prevention measures baked into their design, including fire-resistant materials, landscaping precautions, and fire hydrant access. You should have early detection and alert systems like smoke, heat, or flame detectors and suppression systems like fire extinguishers and sprinklers. Hopefully, you observe basic fire safety protocols like storing flammable materials properly and not leaving open flames unattended. Finally, you should have fire insurance to protect yourself financially.

None of those measures guarantees your house won't catch fire, but collectively, they mitigate the risk and extent of fire damage. Similarly, identity theft protection doesn't guarantee your personal information will remain secure, but it reduces the likelihood you'll experience the worst outcomes of having your identity stolen. 

Like fire protection, identity theft protection isn't a single measure but an array of complementary measures designed to safeguard your personal information.

Types of identity theft protection

Standard features offered by identity theft protection companies generally fit into one of the following three categories:

• Monitoring and alerts — Given how quickly identity thieves put stolen data to ill use, early detection and warning are critical to minimizing damage. Identity theft detection companies monitor your personal information for suspicious activity and notify you when something is amiss. What you get varies among companies and plans but usually includes monitoring of credit reports, social security numbers, property and court records, and more.
• Security tools — While security measures aren't foolproof, your data is less vulnerable with some of the features that identity theft protection services offer. This includes tools like antivirus and malware protection, a virtual private network (VPN) for safe browsing, and password management.
• Recovery — When your personal information has been compromised, identity theft protection can help you limit further damage by freezing your credit and exposed accounts. It can also help you recover your identity and cover related expenses, though it's unlikely to reimburse direct losses resulting from fraud. 

Identity theft protection and credit monitoring

One identity protection feature to prioritize is reporting from all three major credit bureaus ; many entry-level plans only monitor one bureau, leaving room for suspicious activity to slip through unnoticed. You should also look for a service that gets audited regularly by independent security experts and deletes your information when you cancel your subscription (rather than holding onto it indefinitely).

How to report identity theft

If you suspect your identity has been stolen, your first action should be to freeze your credit reports to prevent the thief from applying for credit in your name. It's free and won't damage your credit. You can always unfreeze your reports later when the dust settles. 

Your next steps to reporting identity theft depend on the nature of the identity theft and any fraud that may have already occurred:

• File an identity theft report: IdentityTheft.gov is a Federal Trade Commission program that will help you create a recovery plan and generate an identity theft report that you can use later as documentation. You can file a report over the phone at 877-438-4338, though you won't receive that identity theft report.
• Report the fraud to involved companies: Notify any banks, credit card issuers, or other companies involved in your identity theft case. The sooner you do this, the better. If you don't report within a certain timeframe, you could be liable for any debts incurred.
• Notify the credit bureaus: Call at least one of the main credit bureaus to let them know your identity has been stolen. The Fair Credit Reporting Act requires credit bureaus to notify the others, and you'll receive a 90-day initial fraud alert , which means creditors have to take reasonable steps to verify the identity of anyone applying for credit under your name. Later, with an identity theft report, you can extend the fraud alert to seven years.
• Contact law enforcement: Depending on the situation, you may want to file a police report, especially if you know who stole your identity. Some creditors may also require you to file a report with law enforcement.

If your Social Security number has been compromised, and you continue to have issues with identity theft, you may be eligible to get a new Social Security number . However, the requirements for a new Social Security number are high. You need to have been repeatedly targeted by identity thieves or in situations of harassment, abuse, or life endangerment. You'll need to contact your local Social Security office and arrange an in-person appointment.

How to prevent identity theft

While an identity protection service will make it harder for hackers and identity thieves to use your identity, Eva Velasquez, founder and CEO of the Identity Theft Resource Center, says that "hiring a service does not mean you can or should abdicate all responsibility for good identity and cyber hygiene." She says that many financial organizations may refuse to reimburse victims if they determine the victims didn't take sufficient care of their credentials and accounts.

Because identity theft is often a crime of opportunity, taking steps to reduce the risk of identity theft can go a long way toward preventing it entirely. You can do a lot to protect your personal information by practicing good data hygiene and staying vigilant about how your information is used and distributed. Simple steps like using strong passwords and antivirus software, securing your mail, and regularly reviewing account statements for suspicious activity will help you prevent and detect identity theft.

You can also look into various products beyond identity theft protection to prevent identity theft. You ask the credit bureaus to  freeze your credit  or place a fraud alert on your  credit reports , preventing identity thieves from borrowing money using your credit. These are free services offered by credit bureaus.

Those practices, combined with well-rounded identity theft protection, will significantly reduce the risk of having your personal information compromised.

We interviewed identity theft experts to inform our picks for the best identity protection services. These answers have been edited for concision. Here's what they had to say:

Is it worth it?

Eva Velasquez, CEO and president of the Identity Theft Resource Center:

Paid identity protection services can have value for individuals and families that have the financial means to pay for the services. These services can take some of the leg work out of monitoring your identity and the recovery process should an identity crime occur. I often use the analogy of hiring a pet groomer or grooming my dog myself. I can bathe and groom my dog for "free," but I do have to consider the cost of the shampoo, tools, water, and my time versus hiring someone to do it for me. Both are legitimate ways to meet the need but depend on my personal preference.

Before you purchase, make sure that you don't already have this benefit available to you. Some homeowners or renters insurance plans have riders that provide this coverage. Some employers offer these services as an employee benefit for free or at a discount. Some membership organizations you already belong to may also offer this as a benefit at a reduced cost.

Jeanne Kelly, credit coach and founder of The Kelly Group:

Absolutely. It is crucial to recognize that even if you are cautious about sharing your personal information, it is still stored in various databases, such as those of financial institutions, schools, and medical offices. Therefore, having identity theft protection ensures that you are promptly alerted in case of any issues and provides professional assistance in restoring your identity.

Paul Kim, associate editor of credit scores at Business Insider: 

Identity protection can be a nice thing to have for peace of mind. However, most people don't need to spring for the fanciest, most expensive plan out there. Some of the cheaper plans, plus a little vigilance on your part, will often do the trick. 

How do I determine the level of identity protection I need?

Ask yourself the following questions: How many people do I intend to cover? What are the ages of the individuals needing services? Do they have access to, and can they make effective use of digital platforms? How digitally engaged are they? Make sure you purchase coverage that meets your individual needs.

For example, if you purchase a family plan with features including cyberbullying monitoring, is that something you currently need? Are your children of an age that they are engaged online, and this feature is helpful? If you have plans available through an employee benefits program or insurance policy, ask your benefits administrator or insurance broker for assistance in determining the level of coverage that is most suitable for you.

Kelly: 

Conduct thorough research to understand the available options. It is not sufficient to rely solely on receiving alerts. It is essential to find an identity theft protection service that not only notifies you but also offers robust support in resolving identity theft issues. Think of it as having an alarm system that also sends help when triggered. Look for services that provide the expertise of private investigators to assist you throughout the identity restoration process.

When shopping for identity protection, you should think about how much of a risk identity theft poses. Obviously, everyone can be targeted, but some people are at higher risk. Certain states have higher rates of identity theft than others. Additionally, people who were victims of identity theft are more likely to be targeted than those who have never had their identities stolen.  

What are the most important identity theft protection features?

Transparency. This is an individual choice. The important features are going to vary based on the individual. However, a service that is transparent about what it covers and what it does not is key. Make sure you read all the information to understand what is covered, how the service is provided, and the limitations of the service, if any. Read the terms of any insurance plans carefully and ensure you understand what losses are actually covered and what your duty of care or other obligations are to seek reimbursement for losses.

One crucial feature is the ability to grant power of attorney or authorization for someone else to handle the intricate process of restoring your identity. Dealing with identity theft can be incredibly time-consuming, often requiring hundreds of hours. By having experts handle the work on your behalf, you can save valuable time and ensure that the restoration process is handled effectively. It is crucial to proactively obtain identity theft protection before any issues arise.

Two features I look out for are dark web monitoring and court records monitoring because it's difficult to replicate these yourself. If you're looking for basic identity protection that may not offer every type of monitoring, ensure that the service will at least monitor the dark web and court records. 

What makes an identity theft protection service good?

In addition to my response above, also read consumer reviews and look at third-party accreditation sites such as the Better Business Bureau. Reading reviews will allow you to determine if there is a pattern of behavior that demonstrates poor customer experience. While no company is going to be perfect, seeing how they resolve customer complaints and issues will be useful in making your determination to do business with them.

A good identity theft protection service should monitor multiple aspects of your identity, including your social security number, driver's license, passport ID, medical card, social media accounts, and address changes with the postal service. Remember, identity theft encompasses more than just credit-related fraud. For instance, if someone gains access to your medical ID or driver's license number, they can exploit it to receive medical services or cash checks under your identity. Therefore, ensure that the service you choose monitors these essential areas. Additionally, in the event of an identity theft incident, make sure the service provides comprehensive support for identity restoration.

The identity protection services I pay particular attention to will offer solutions for the before, during, and after of identity theft. So, it'll offer features that protect your identity before any theft occurs, like cybersecurity measures and VPNs. The identity protection service will also provide identity monitoring to alert you when identity theft occurs. Lastly, a good identity protection service will have restoration experts who will guide you through the process of recovering your identity. Ideally, they'll do most of the work for you.

How we rate identity theft protection services

We rate services on a scale from one to five stars, with five being the highest. We apply these ratings to the overall service and the individual plans it offers. 

Provided features (45%)

Most identity theft protection services will boast a long list of features that they provide. You will likely never notice some of these features running in the background, such as home title monitoring. Others, you'll be able to achieve for free elsewhere, such as credit freezes .

When we look at a service's features, we pay attention to particular features that make or break a protection service. We also look at any unique features that a service provides, making it stand out from other services.

Fraud resolution (20%)

Identity monitoring matters little if a service doesn't also provide tools to help you recover your identity . That's why it's so important that your identity theft protection service has some form of fraud resolution. Many services also offer lost wallet protection, which assists you in making all the necessary cancellations and replacements that come with losing your wallet or having it stolen.

Ideally, a service will provide a fraud resolution expert dedicated to your profile if dealing with a stolen identity. This person will help you navigate the process of recovering your identity and assets. They'll also help you contact the three major credit bureaus and any other involved parties to report identity theft .

It's also important to ensure that your identity theft protection service has some form of identity insurance that will help you cover any monetary losses due to fraud.

Dark web and court records monitoring (10%)

While some features that identity theft protection services perform can be done on your own or found in other services, dark web monitoring and court records monitoring are particularly hard to find elsewhere.

Dark web monitoring scans the dark web (which you likely do not know how to access) to see if anyone is selling your personal information. Court records monitoring scans public records for your information in case anyone has given your information in their criminal case. 

Credit monitoring capabilities (5%)

Credit monitoring is a cornerstone of all identity theft protection services, alerting you of any changes to your credit report. Any unexpected updates in your credit report, like a new line of credit , are likely signs of identity theft. 

While the presence of credit monitoring capabilities is important in securing your identity, we've deprioritized it in our ratings. This is because you can find free credit monitoring services that will provide you with the same monitoring and credit reports that you'd pay for with some of these services. You can also request a  free credit report weekly from each of the three credit bureaus. 

You can find our list of the best credit monitoring services here. 

Unique features (10%)

The truth of identity protection is that most services are very similar to each other in what they offer. What distinguishes certain services are standouts that catch our eye.

For example, PrivacyGuard identity theft protection service includes a credit score simulator, which will give you a rough estimate of how your credit score will change with certain actions, such as a new loan. More cybersecurity-focused services, will include a VPN, secured document storage, and anti-malware protection.

Some services that offer family plans will also have parental features, such as social media monitoring. Some services will also monitor your children's online activity for cyberbullying or hate speech. Other plans, such as Identity Guard , feature an optimized mobile experience, providing users with peace of mind while on the go.  

Price of service (45%)

Tiered plans (35%)

Ultimately, many identity theft protection services offer very similar features. Because so many services often perform very similar functions, the main distinguishing factor between these services is how much they cost. Many services will spread their array of features across different plans that get progressively more expensive the more protection it offers. 

For example, many services will include credit monitoring for one bureau in their basic tier and reserve three-bureau monitoring for their premium tier. Other services may give you dark web monitoring in the basic tier but withhold court records monitoring for higher tiers.

We prefer services that include their entire catalog of features in one overarching plan, like Aura identity theft protection. However, this doesn't necessarily mean that tiered services are bad. If you only need to reduce the risk of identity theft to a certain level, there's no need to pay a premium price when the basic plan will suffice. 

Group plans (10%)

Family plans and couples plans will give you and your loved ones the same level of protection for a discounted price. These services, such as those offered by IdentityIQ , also come with family-specific features tailored to monitoring your children's identity and online activity. 

Customer support (10%)

While price and features are the two most important factors we use to judge an identity theft protection service, we also recognize these services as businesses that need to be responsive to their customers. 

When we talk about customer support, we're looking aspects like cancellation policies, annual membership discounts, and free trials. We also look at a business's Better Business Bureau score to evaluate how they respond to customer complaints. 

We also look to see if there are any necessary qualifications to enroll in a service. Some credit cards have identity theft protection  that are only available to their cardholders, such as American Express CreditSecure. Another example is Complete ID, which is only available to Costco members.

What to know about identity theft protection service ratings

Our system for rating identity theft protection services balances the price of the service with the features that the service provides. It also acknowledges that these services are businesses that must be responsive to customers. 

While we can analyze these services on a tangible, quantifiable level, the best identity theft protection service is one that you'll actually use. A service may not have the most features, but if that service inspires you to be more proactive about protecting your information, that's a selling point. The next step is finding out how to get identity theft protection  that works for you.

Included in our guide on the best identity theft protection services is our expert panel, consisting of experts in identity theft protection and credit. Eva Velasquez, CEO of the Identity Theft Resource Center and one of the members of our expert panel, recommends considering several questions about your specific situation. You should consider how many people you're covering, their ages, and how digitally engaged they are. "Make sure you purchase coverage that meets your individual needs," Velasquez says.

Identity theft protection services can protect you from fraud that can cost you thousands of dollars.  If your identity is stolen, you can lose money and time and may find it really difficult to obtain loans, credit cards, and other financial products. 

Identity theft services can help with the financial costs associated with identity theft incidents. It can also help you report the crime and may even catch it earlier to reduce the amount of damage that identity theft can inflict. 

Child identity theft can damage your child's financial future. Aura has a comprehensive family plan that allow parents to protect their children's identity and monitor their online activity. Aura's family plan covers five adults and unlimited children.

All the identity protection services above will apply to all demographics. That said, it might be worth your time to look into LifeLock, which offers a sizable discount to AARP members for their first year. 

The best identity theft protection service depends on what you're looking for in identity protection. That said, Norton 360 with LifeLock is the best overall identity theft protection service for its cybersecurity functions and identity protection. It's also on the more expensive side of this list, so consider other options if you want a cheaper service.

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ByteDance Denies Media Report of Plan to Sell TikTok

FILE PHOTO: A view shows the office of TikTok in Culver City, California, March 13, 2024. REUTERS/Mike Blake/File Photo

BEIJING (Reuters) - ByteDance has no plan to sell TikTok, the company's official account said in a statement posted on Toutiao, a media platform owned by the China-based firm.

The Information earlier reported that ByteDance is exploring scenarios for selling TikTok's U.S. business without the algorithm that recommends videos to TikTok users.

U.S. President Joe Biden on Wednesday signed into law a bill that bans TikTok in the country if its owner, ByteDance, fails to divest the popular short video app over the next nine months to a year.

(Reporting by Ethan Wang, Ella Cao and Ryan Woo)

Copyright 2024 Thomson Reuters .

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Medigap Plan G is the most comprehensive Medicare Supplement Insurance plan that all Medicare members can buy. It’s also the most popular of these plan types [0] AHIP . The State of Medicare Supplement Coverage . Accessed Feb 9, 2024. View all sources .

Plan G covers nearly all of the out-of-pocket expenses associated with Medicare Part A and Part B, such as copays, coinsurance and deductibles. (Medigap plans sold to people who became eligible for Medicare after 2019 can’t cover the Medicare Part B deductible — $240 in 2024 — so Plan G doesn’t cover that cost [0] Centers for Medicare & Medicaid Services . Compare Medigap Plan Benefits . Accessed Feb 9, 2024. View all sources .)

Since it can be difficult or impossible to change Medigap plans after the end of your Medigap open enrollment period , it’s a good idea to choose your Medigap Plan G company carefully.

Here are NerdWallet’s picks for the best Medicare Supplement Plan G companies in 2024.

Best Medicare Supplement Plan G companies

NerdWallet compares Medicare Supplement Insurance companies based on plan availability, member satisfaction, pricing, extra perks, state footprint and more.

Best overall: AARP/UnitedHealthcare

AARP/UnitedHealthcare

AARP Medicare Supplement Insurance plans from UnitedHealthcare have low complaint rates when compared with most competitors. Some plans have several variations with different prices, wellness extras and/or network restrictions, which could make choosing a plan confusing.

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from askchapter.org

Plan types offered Medigap plan types the company generally offers (availability may vary by location). Options include Plans A, B, C, D, F, G, K, L, M and N

A, B, C, F, G, K, L and N.

NAIC complaint rate How often the company’s members file complaints about their policies as compared to the industry average, according to data from the National Association of Insurance Commissioners (NAIC). NerdWallet conducts its data analysis and reaches conclusions independently and without the endorsement of the NAIC.

Far fewer than expected

Premium discounts available Based on the number and size of a company’s available discounts on monthly premiums, in comparison to other insurance companies.

Above average

• Offers as many as eight out of 10 plan types.
• Available in every state.
• Few customer complaints and strong third-party customer satisfaction ratings.
• Plans with health and wellness discounts may cost extra, while some competitors offer them for free.
• Plan variations and extras can get confusing.
• Network requirements for lower-cost Medicare Select plans.

Service area: 50 states and Washington, D.C. [0] UnitedHealthcare . AARP Medicare Supplement Insurance Plans for Retirees . Accessed Feb 9, 2024. View all sources .

Why we like it: AARP and UnitedHealthcare make Medigap Plan G policies widely available with low prices and few member complaints. Unless you’re looking for specific side benefits or a high-deductible Plan G option, AARP/UnitedHealthcare Plan G can be hard to beat.

» MORE: Read our review of AARP/UnitedHealthcare Medicare Supplement Insurance

Best for additional coverage options: Anthem

Anthem stands out from most other Medigap companies by offering options to add dental and vision coverage to Medigap plans. It offers only a few Medigap plan types, though, and serves fewer states than most competitors.

A, F, G and N.

Close to expected

• Mix and match dental and vision add-ons.
• Several discounts based on household and payment methods.
• Extra perks for fitness, health and wellness products and services.
• Lower-coverage plans are sometimes more expensive.
• Few Medigap plan types available.
• Available in only about one-third of states.

Service area: 14 states [0] Anthem . Medicare Supplement Plans (Medigap) from Anthem . Accessed Feb 9, 2024. View all sources .

Why we like it: If you want to roll dental, hearing and vision coverage into your Medigap Plan G purchase, Anthem is a strong option. The company’s Anthem Extras packages offer multiple tiers of dental, hearing and/or vision coverage that you can mix and match with most Anthem Medigap policies to fit your needs [0] Anthem . Anthem Extras Packages . Accessed Feb 9, 2024. View all sources .

» MORE: Read our review of Anthem Medicare Supplement Insurance

Best for high-deductible Medigap Plan G: Mutual of Omaha

Mutual of Omaha

Mutual of Omaha's household discount of up to 12% is larger than most competitors' discounts, and members file few complaints about their policies.

• Complaint rates are well below the market average.
• Available in every state but Massachusetts.
• Up to a 12% discount for living with another adult.
• Few choices for plan type.

Service area : Every state except Massachusetts, plus Washington, D.C. [0] Mutual of Omaha Corporate Communications . Email Confirmation . Accessed Feb 9, 2024. View all sources .

Why we like it: Mutual of Omaha makes high-deductible Medigap Plan G widely available, whereas many competitors offer it in fewer states. Mutual of Omaha plans get far fewer complaints than average and have reasonably competitive pricing. The pricing gets even better for applicants who qualify for a household discount of up to 12% (terms and discount levels can vary by location) [0] Mutual of Omaha . Medicare Solutions Product Portfolio . Accessed Feb 9, 2024. View all sources .

» MORE: Read our review of Mutual of Omaha Medicare Supplement Insurance

Honorable mention: Blue Cross Blue Shield

Blue Cross Blue Shield

Blue Cross Blue Shield is a collective of 33 companies. BCBS plans are available throughout the country, but plan types, prices and performance vary.

A, B, C, D, F, G, K, L, M and N.

• "Blue to Blue" program could mean easier changes to coverage in the future.
• Available in all 50 states and Washington, D.C.
• Offerings and experiences vary depending on BCBS company.
• Higher prices for Plan N.
• Cheaper Medicare Select plans have network requirements.

Service area: 50 states and Washington, D.C. [0] Blue Cross Blue Shield . BCBS Companies and Licensees . Accessed Feb 9, 2024. View all sources .

Why we like it: Blue Cross Blue Shield licensees offer Medigap policies everywhere in the country. Broadly speaking, BCBS companies offer competitive prices and have roughly average complaint rates — but because different BCBS companies serve different locations, pricing, perks and member experience can vary. It’s worth looking at the Blue Cross Blue Shield options in your area to see how their Plan G offerings compare to other top companies.

» MORE: Read our review of Blue Cross Blue Shield Medicare Supplement Insurance

Find the right Medicare Supplement Insurance plan

Because Medigap plans are standardized, you can get precisely the same Medicare benefits from any company offering the plan. So when you shop, keep these considerations in mind to find the best policy to fit your needs:

Is your preferred plan available? Health insurance companies don’t always sell every plan, so check who sells the plan you want to buy in your area.

What are the premiums? Prices for the same plan can vary between companies, so check to find the most competitive rates.

Will your premiums change over time? Most policies cost more as you age, but some companies offer policies that let you lock in a price when you sign up.

Are there extras? Medigap plans’ core benefits are standardized, but in certain cases, some companies include such perks as discount programs or gym memberships.

Here’s an overview of our top picks for Medigap Plan G:

Best overall: AARP/UnitedHealthcare Medicare Supplement Insurance

Best for additional coverage options: Anthem Medicare Supplement Insurance

Best for high-deductible Medigap Plan G: Mutual of Omaha Medicare Supplement Insurance

Honorable mention: Blue Cross Blue Shield Medicare Supplement Insurance

Note regarding NAIC complaint data: NerdWallet conducts its data analysis and reaches conclusions independently and without the endorsement of the NAIC.

Medicare Supplement Insurance ratings methodology

NerdWallet’s Medicare Supplement Insurance (Medigap) ratings are based on pricing, discounts, plan types offered, complaint data from the National Association of Insurance Commissioners, consumer experience, additional perks and benefits, and more. To calculate each health insurance company's rating, we adjusted the scores to a curved 5-point scale, rounded to the nearest half star.

NerdWallet reviewed 13 Medicare Supplement Insurance companies based on highest enrollment and greatest online search volume. These ratings are a guide, but we encourage you to shop around and compare several insurance quotes to find the best coverage and rate for you. NerdWallet does not receive compensation for any reviews. Read our editorial guidelines and full ratings methodology for Medicare Supplement Insurance.

Insurer complaints methodology

We examined complaints received by state insurance regulators and reported to the National Association of Insurance Commissioners. To assess how insurers compare to one another, the NAIC calculates a complaint index each year for each subsidiary, measuring its share of total complaints relative to its size, or share of total premiums in the industry. To evaluate a company’s complaint history, we calculated a similar index for each insurance company, weighted by market shares of each subsidiary. We score companies based on this index of how many complaints the company receives relative to its market share. NerdWallet conducts its data analysis and reaches conclusions independently and without the endorsement of the NAIC.