How to open an MFI (microfinance organization): step by step instructions

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The microcredit business has been developing in Russia not so long ago, but has already become a leader among consumers. Many people seek services from such institutions. But in order to establish your business, it is important to register it. How to open an MFI is described in the article.

Types of MFIs

Each country has its own types of MFIs. According to the legislation, the form of their registration is determined. The main feature of MFIs is a simplified lending system. These institutions are divided into the following types:

1. Financial group.
2. Enterprise Support Fund.
3. Credit union.
4. Credit society.
5. Credit agency.
6. Credit cooperative.

Some MFIs are considered subsidiaries of banks. For the latter, such cooperation is beneficial. Banks get the opportunity to provide loans, the rates for which are much higher than those issued by him. But there is a risk of non-repayment of the loan. The activities of MFIs are controlled by the Central Bank of the Russian Federation. Any violations in the work of the institution lead to liability.

Differences between an organization and a bank

Both financial institutions provide loans to citizens. How is an MFI different from a bank? Their difference lies in the volume of loans provided. The differences are as follows:

1. Loan is issued only in national currency.
2. The MFR cannot unilaterally make changes regarding the rate, the procedure for defining obligations under the contract, the duration of their validity, commission.
3. A microfinance organization does not have the right to impose fines on a borrower who paid all or part of the microloan ahead of schedule if he notified about it.
4. MFI does not participate in the securities market.
5. MFI makes fewer demands on the client.

In many cities you can find such companies. They have bright advertising to attract customers. Although there are differences between organizations, in general, MFIs in Moscow and other regions work on the same principle.

Why are such institutions in demand?

The first organizations began to open in 2011. Since then, their number has been increasing. This is due to the fact that the state has little control over the activities of firms compared to large banks. MFI benefits include:

1. Simple registration of a legal entity from which work will be carried out.
2. Optimum leverage and soft economics.
3. No insurance accruals required.
4. No reserve requirement required.
5. No capital requirements.

Disadvantages of MFIs

This viewbusiness has the following disadvantages:

1. There is a risk of non-repayment when issuing loans. This must be taken into account when planning expenses and making a profit.
2. In case of violations during activities, sanctions and fines are expected to be introduced.

Before you open a new MFI, you should familiarize yourself with the legal aspects of the activity and carefully study the information about clients. Then the business will be really profitable.

Business Startup Options

How to open an MFI more profitable? There are 2 ways to start activities:

1. Franchise work.
2. Independent activity - by opening an organization.

Both options are common in Russia. Regularly, new MFIs are opened under a franchise. This is a profitable option in financial terms, so it is often chosen by aspiring entrepreneurs. A lot of work is done by the franchisor, who provides accounting and legal support, provides funds.

Be sure to train specialists, which reduces the risks of non-return and increases the speed of payback. The disadvantages include high investments, although the price of the franchise is different. It is important to consider the amount of contributions, return on investment, the level of participation of the franchisor in the work.

Another option is to set up a firm yourself. This method takes more time, besides, you need knowledge on working with borrowers, including problem ones. But with the investment of funds, there is the possibility of obtaining a large profit, which remains with the owner. If you don't have yourlegal department and security service, work with problem debtors is transferred to collectors.

Register

How to open an MFI? The law states that such a company can be founded by a legal entity that is registered in the form of funds, institutions, excluding budgetary, autonomous non-trade organizations, partnerships, economic companies. It is not necessary to obtain an MFI license. This requirement applies to banks. It is only necessary to have a certificate from the Federal Financial Markets Service on entry into the register of MFIs. This document confirms the legality of actions. After registration, you can start a business.

To open MFO LLC, you must have:

1. Company Charter.
2. Decisions to establish a firm.
3. Forms 11001.
4. Order on the appointment of a general director with the duties of chief accountant.
5. Statements about the tax system.
6. Receipts for payment of state duty.
7. Request a copy of the charter.

Getting status

The following documents are required to register an MFI:

1. Application for entering information into the register of MFIs.
2. Certificate of registration of a legal entity (copy).
3. Decision on the creation of a legal entity and constituent papers (copies).
4. Decision of the election of the bodies of the legal entity (copy).
5. Information about the founders.
6. Data on the actual address.
7. Inventory of documents.

The decision on the application is made within 14 days. After 10 days after receiving the documents by the FFMS, you can find your organization inregistry.

Raising money

It is important to know not only how to open an MFI, but also how to raise money. Institutions can attract funds from individuals: founders, participants, investors. There is no limit on the amount of money raised. If another person issues funds for a loan, subject to the conclusion of an agreement with one borrower, then the maximum amount is 1.5 million rubles.

If an individual transfers money to an MFI, then a 13% tax is deducted from the organization's income. In this situation, institutions withhold the amount individually and are calculated with the state budget. The depositor is given income, except for personal income tax.

The organization creates rules for attracting funds to deposits:

1. Equity – not less than 5%.
2. Liquidity – from 70%.

The own funds of MFIs in Moscow and other regions include capital, reserves, loans. When a company goes bankrupt, loan claims are satisfied only after all debts are repaid. These conditions are considered unquestioning, binding and are indicated in all contracts. Quarterly calculations are carried out according to the financial statements, which are submitted to the FFMS.

Investments and profits

To achieve a quick return on investment, you need to draw up a business plan for the organization. Starting a business costs:

1. Capital investment.
2. Capital for issuing loans - 900 thousand rubles.
3. Purchase of equipment - 100 thousand rubles.
4. Purchase of inventory - 50 thousand rubles.

Current costs include:

1. Office rent - 20 thousand rubles.
2. Salary for 4 employees - 120 thousand rubles.
3. Advertising - 50 thousand rubles.
4. Costs - 30 thousand rubles.

The amount of capital investment will be 1 million 50 thousand rubles, and current costs - 220 thousand rubles. Costs can be different, it all depends on the case, but according to this example, it will be possible to calculate all the nuances. If you wish, you can organize an MFI under a franchise on favorable terms.

Business plan

When opening an MFI, consider:

1. Expenses for the maintenance of the company, including office rent, repairs, salaries.
2. Initial investment.
3. Staffing.
4. Advertising.
5. Losses.
6. Payback period.
7. Profitability.

MFI business is profitable, but at the same time it has a lot of competition. Therefore, the company's management needs to get ahead of rivals. This is achieved through advertising that tells about promotions and special offers. An important aspect is the quality work of employees, which automatically promotes the business.

Risk accounting and work with debtors

Lenders have always been successful. Now many people turn to MFIs to receive money, although the rates there are quite high. It is necessary to focus on people who are not familiar with the financial sector. Urgent loans should be offered when a person needs funds here and now.

Almost all MFIs provide money with a passport. This loy alty increases the amount of profit, but it also increases the risks, as customers may not repay the debt. So the stakes are quite high. To stay in profit, the risk is included in the bet. It is determined when drawing up a business plan.

It is important to consider the following nuances:

1. If the borrower is carefully checked, then about 10% is budgeted for the risk of default.
2. When providing loans with credit history checks, the risk of default is 10-20%.
3. Urgent microloans issued by passport have a high percentage of risk - 30-40%.

Recoverability and profit is determined based on how the work with debtors will be carried out. As a rule, in small firms there is no personal security service and lawyers. Therefore, it will be difficult to return the funds. There will be no such issues under the franchise. When working independently, debts are sold to collectors, but their value will be less than the entire amount of the debt.

Thus, when opening an MFI, it is important to consider many nuances in order to establish a profitable business, taking into account all the risks. With a competent approach to business, it will be possible to conduct a successful operation of an institution that will only develop over time.