
Ask HN: How to start a lending business? - lukasm
I&#x27;d like to start a company that allows people for an easy access to loans.<p>First scenario: One person in a family lost a job due to lockdown and his&#x2F;her partner has a stable employment. The employer has a lot of capital and instead of giving people gym passes and other benefits, employer could use that money to give people interest-free loans.<p>There is no such thing in my country, but I&#x27;m not sure how to start. I have no knowable of the business and I&#x27;m a bit worried about regulations.<p>How to start?
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pesfandiar
I imagine lending is highly regulated in most jurisdictions, and has a high
barrier to entry. If you share your location, someone might have more accurate
information.

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shoo
I agree. The up front regulatory & capital requirements might be similar to
starting a bank.

Perhaps the traditional banking lending product that matches this idea is
"unsecured personal loan". Traditional bank would need functions to assess
credit risk of loan applications, handle disputes, chase up loans in default,
offer assistance to borrowers in financial hardship. Also need a way to obtain
capital to lend.

Not obvious to me why a business that is not already a bank would want to take
on some/all of these functions to offer loans to employees.

Also, there is increased potential to create messy situations by combining
employer:employee relationship with lender:borrower. E.g. current economic
environment where companies have massive drops in revenue and need to lay off
staff. If employer lays off staff who have borrowed money from employer, quite
unlikely that loan will be paid back. Perhaps situation is structurally more
risky (due to correlated risks that impact employer and employee) than if a
third party (e.g. a bank) was lender. Similarly if employee has borrowed from
employer but is fired.

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justaguyhere
Have you checked Kiva.org and related organizations? They are asking for
recommendations for small loans now, to help deal with Covid-19.

It would help if you indicate which country you are from

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lukasm
I'm based in Poland at the moment.

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smarri
If the employer already has access to the employee bank account (e.g. to pay
salary) then do they need your service?

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lukasm
For CRM and financial education. Later on I'd automate the process so they
don't have spend any resources on it.

The benefit for employees in a low-cost debt

[https://www.salaryfinance.com/uk/borrow/](https://www.salaryfinance.com/uk/borrow/)

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smarri
I still dont understand the proposition. Do you want to make loans to
employees and get repayment from their salary like the link? Or provide
employees with financial education? I have experience in the Polish financial
services market, and worked in partnership with Polish banks, so would like to
offer my view.

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lukasm
I'm considering just selling software to employers to manage loans OR get
repayment from their salary like the link. Financial education would be just
something extra.

I'm still playing with the idea. The inspiration comes from the fact that a
few friends work for companies that use pen and paper to manage employee
loans.

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smarri
Ah okay I see thank you. I bet there are many places using paper and excel so
there will definitely be room for your product. I've been in the lending
market before, we partnered with banks to do it e.g. Alior in Poland. So the
business would make a payment to the employee, and you're software could track
the payment and repayments? Would you want to initiate the payments too or
just track them?

