NU6 by MG, Internet Lending

NU6 Paper (R01-8177)

published on www.marcguison.blogspot.com

New Business Idea: Internet Lending

We know for a fact that as of July 2011, total OFW remittances to the Philippines had already exceeded US$11 billion.   Even with the global economic slowdown in recent past, our hard working OFWs are still sending money to their families.  However, it is a common story that there are certain occasions where the family needs money urgently.  They need the money way before the OFW receives their weekly pay check.  This results to the family to borrow money from moneylenders that charge very high interest rates for short-term loans.

This is a story that I have heard several times from my clients who had resorted to borrowing from bombays who charged 20% interest for a 30 day loan!  They had to do it because their sons or daughters or parents cannot send the money when they needed it the most.

Hence, I thought of creating an online facility that will help bridge this problem.  Most OFWs, especially those in the United States, have credit cards.  They use that to make their daily purchases and they pay it off every pay day.  If their family needs money ASAP, my online facility will enable the OFW to send money by paying me via credit card for the loan that will be released to their loved ones. This internet lending will not charge interest rates as the risk of payment of the money is carried by the credit card issuer.  I will merely charge a minimum transaction fee for the processing of the payments, courier service and incidentals to the beneficiary.  

Basic requirements to run this internet business are:

1.  Approved internet merchant account from a reputable bank.

2.  Internet domain name and website that is accredited by Visa and MasterCard.

3.  Database that will gather the information of sender and beneficiary.

4.  A small call center that will verify information from the beneficiary and to determine preferred delivery method (each method will have a corresponding transaction fee)

5.  Effective E-marketing to introduce the company as a reputable business.

Prior to implementation, the company has to review the Anti-money laundering act and submit to compliance requirements of the SEC and BSP.  A full business plan can be created once the government approves the legality of this business.