Starting Finance Company
The best example of a finance company is a bank. Be it a large or small scale bank, it has always been the kind of institution which has been the refuge of people who needs financing on their homes or a new business. If you are planning to start your very own finance company problem, it will not be a problem.
That is if you know the right things which are needed in order to build one, and of course the right resources.
Source of Cash Starting a Finance Company
To start your finance company is quite challenging. This is not for the faint-hearted for it is subject to risks. As a matter of fact, it needs two kinds of cash sources before you can start one. These two kinds are the ‘short term source of cash’ and ‘long term source of cash’. The former generally refers to your money as the owner, the line of credit from a bank, and having a loan from somewhere else. The most difficult out of these three is the second one which is the line of credit from a bank. You need to make your luck work in this case.
The second one which is referred to as the long term source of cash means the duration of time on how long you are going to keep the receivable from the consumer. The consumers’ role in here is to borrow money from you. In point of truth, this kind of cash source depends on the amount of the short term money which is necessary to your company.
License: An Essential Requirement
Once you have done the first part, begin the second part. This is fulfilling the entire requirements needed for you to obtain your license. In starting a finance company, you are going to need to undergo an investigation. This is required to make sure that you are not involved with any fraudulent activity. You will have to pay a certain fee for this. This investigation is a prerequisite in acquiring a license. You will also have to pay for your license. You can pay it in a form of a check or cash, whichever you prefer. Keep in mind that the fee in this type of license is non-refundable. With your license is the surety bond to your state. This is a contract between you and your state stating that the cash amount will be your compensation if ever any damages take place. This is more like a promise to your state that you are going to practice legally.
Another requirement in obtaining a license is the submission of you financial statements. There is a specific net worth that you have to meet in your financial statement. It is your state which will provide this. There is also the loan originator that you have to pay to your state. Its amount usually varies from state to state. You also have to apply for your life insurance broker. There is also a pre-licensing education which you need to carry out at an institution. Most of the institutions require forty (40) hours for you to complete it. Make sure that the institution that you will enter is duly accredited by your state. Also, your state might give you an exam which you will need to pass. This is the last requirement on your license application. The duration of validity of your license will be two years. In order for you to renew it, you will have to take the same exam again. After doing all these stuffs, the next step for you to take is to build your office, buy the important materials, and hire some competent employees. Having all these accomplished, you are good to operate your finance company.
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