Money Lending Is Legal Only When You Have A License

money lending

You can lend some money to your friend who is in need at your own risk. Your friend may promise you to return it without any interest mostly after a month or any other time agreed with you. However, if the friend is unable to do so or even refute borrowing money from you and refuses to pay back, you will not have any legal protection or help to recover it. In such cases your money is as good as lost.

However, if you want to make money lending your profession then you will need to have to do it legally to minimize, as you cannot eradicate, the risks involved in it. You can only do this if you have a proper license for lending money to others, friend and family.

Most people do not know the way to go about it when they want to apply for a license for money lending. However, this is a simple process as you will find when you go through this article.

The application process

The process to apply for a license for money lending starts with downloading the application form.

  • It will come in several parts including a statementform and a supplementary information sheet usually. Check out with your local authority website for the requirements and make sure that you visit government websites only who are authorized to offer such forms.
  • If you are not very keen on using forms available online you can also visit physically the information counter of the money lenders unit in your locality and collect the required forms from there.
  • The next steps involve filing up the three forms separately and carefully as required and manually sign on them.
  • Step three involves arranging for the several documents that you may require furnishing along with the application together with the prescribed application fee.

It is better to find out from the website or from the local office about the types of documents that you need to furnish along with the application for your money lender’s license. However, a typical set of application will include:

  • Two sets of the application and statement forms and one set of supplementary information sheet
  • Evidence of authorization if you are a limited company
  • A business or character reference if you apply as an individual or as a partner of a particular firm.

You will have to go through proper channel when you submit your application. You will need to deliver a set of the application and the statement form to the Money LendersLicensing Section. Other documents may also be required by the commissioner of police and therefore you must know the requirement of your state regarding this matter.

You must follow the rules and process as set in the guideline on application for new or renewal of and for an endorsement on money lenders license. Every money lender including liberty lendingmust abide by these set guidelines to avoid legal hassles and obligations and do their business safely and confidently.

Other facts to know

Now that you have applied and wait for your license to arrive, it is better that you know a few other facts as well.

  • The license for money lending from the relevant authority will be valid for 12 months usually after which you will have to go through the same process for getting it renewed. However, it is entirely at the discretion of the issuing authority of the license to determine whether or not they will renew your license.
  • Typically, if you furnish all documents as required properly and if other conditions are favorable it usually takes 3 to 4 months’ time from the date you submitted the application for the new license to receive it.
  • There are different types of application for a moneylender’s license such as license for individual or a partnership and for a company but all will have the three definite forms to make a complete set of application.
  • There are requisite fees for a money lender’s license that may vary from state to state and therefore you should know about these fees and whom it is payable. You can get this information from the counter of the license issuing office or even download it from the relevant websites.
  • You may submit your application and the check to the office by post or even in person but find out the working hours of the office before you visit.
  • It is important that you go through the pamphlet or general guide so that you know about the requirements in conjunction with the provisions. You are also advised to seek professional and independent advice as you may deem fit.

There are several factors that the issuing authority will consider while granting you the license to lend money. These factors are:

  • Whether you are fit and a sane person to carry on this business as a money lender
  • Your general knowledge, experience and qualification in relation to moneylending business
  • Whether the premises from where you intend to run your money lending business is fit for it
  • The permission from the landlord and the tenant to use the premises for this specific type of business and
  • Whether or not granting you the license will be in accordance to the public interest.

Your application will be scrutinized thoroughly to find whether or not there are any objectionable grounds. To facilitate the investigation you are required to produce two sets of several documents for processing our money lender’s license application such as:

  • Documentary proof that supports your ability to manage the money lending business
  • Reference letter of previous experience in money lending business
  • Relevant certificates
  • Proof to show your financial situation such as bank statements
  • Tenancy agreement for the premises to carry your business
  • Permit to occupy a new building if you operate from own office or shop
  • Floor plan of the premises and
  • Annual return if it is a company.

However, this list is not exhaustive. As per the situation the authority may require a few additional documents to assist the processing.

Author Bio

Kelly Wilson is an experienced and skilled Business Consultant and Financial advisor in the USA.  She helps clients both personal and professional in long-term wealth building plans. During her spare time, she loves to write on Business, Finance, Marketing, Social Media. She loves to share her knowledge and Experts tips with her readers.