Look Out! Subprime Lenders Facing Turbulent Times

The Future of the Small-Dollar Micro-Lending Industry

We define small-dollar micro-lending products as relatively small loan principals of $50 to $5000 for seven days to 48 months having APRs of 30% to 1500% or more. These products include payday loans, car title loans, installment loans, line-of-credit loans, pawn, rent-to-own and similar products not yet envisioned.

Sub-prime, small-dollar micro-lending products are a normal market response to demand for short-term liquidity from borrowers with jobs but little access to other sources of funds. These financially challenged consumers lack access to credit cards, banks, and credit union funding. Their friends and family cannot help because it’s not only embarrassing to ask, but their peers are in similar circumstances.

Lenders must create a business model that:

  • Will survive and thrive under the current wave of competition.
  • Gain access to a sustainable cost of capital
  • Can compete with alternative loan products entering the subprime market weekly [buy-now-pay-later, early access to wages, look-alikes, collateralized loan products…]
  • Can cope with new and existing regulations.
  • Can maintain bank relationships.
  • Can integrate with consumer credit-building opportunity platforms.
  • Anticipate consumer desires and their preferred debt vehicles
  • How and where consumers want to access loans
  • How to structure loan products

The business of lending to the masses.

Demand for subprime, micro-lending loan products continues unabated. As the middle class expands and high FICO (U.S.) consumers debase and decline into lower credit tranches, the demographic for subprime loan products will continue to scale! Study after study consistently concludes that consumers need access to quick, no-hassle, small-dollar loans to meet temporary financial emergencies.

Today’s inflationary environment drives demand for small-dollar loans as well.

Defaults: Price increases this year!

gas: +49%
used cars: +35%
hotel room: +29%
airline tickets: +24%
car rentals: +23%
bacon: +18%
oranges: +18%
furniture: +17%
peanut butter: +16%
crackers: +16%
steak: +16%
suits: +15%
butter: +14%
milk: +13%
lamps: +12%
coffee: +11%
cereal: +10%

My point? Defaults will soon prove to be an issue for lenders. Lenders need tools that provide instant, real-time financial data about their borrowers and applicants. Reach out immediately if you do not have access to the following instant alerts via your loan management platform:

  • Your customer gets paid
  • Your customer receives an IRS check
  • Your customer closes their bank account
  • Your customer’s bank account is negative
  • Your customer receives a loan from a competitor
  • Your customer’s job situation declines
  • Customer payment reminders
  • Ping nearly 50,000 financial institutions, including Cash App, money transfer apps, crypto apps…
  • And much, much more…

Why does this matter? Inflation is rising dramatically. Defaults will soar. Demand for loan products is scaling. He who can qualify, approve and fund a loan fast will win BIG in this new environment. The tool is here today. To learn more:

The Internet and mobile technology continue to impact the small-dollar micro-lending industry profoundly. Consumers residing in states and provinces that do not allow payday loan products to exist routinely obtain them online. Imagine a web that isn’t focused around a computer but is everywhere, on every device, every person, accessible at every location. It’s not a place you go; it’s a layer behind everything you do.

The phone! Enough said! That’s where the action is. EVERYONE does business on their phone today!

Email is less and less likely to be opened by your customer on their desktop or laptop computers. Email “opens” in mobile devices now dominate. This is huge. Micro-lenders who are slow to adapt to this revolutionary reality will experience reductions in loan portfolio size and fail to achieve velocity.

Regulation will continue to dominate the small-dollar micro-lending landscape for the foreseeable future. In every country small-dollar micro-lending products enter the fray, they meet resistance from competitors, including banks and credit unions, so-called consumer protectionists, credit card companies, legislators, and competing Fintech platforms. Many licensing models, including choice-of-law, sovereign nation (tribe), offshore, state-by-state, and province-by-province, continue to “muddy the waters.”

On a local level, more than a few cities, townships, and counties are capping or restricting the number of payday loan financial service centers allowed. Brick-n-mortar operators must continually meet with and educate local politicians and city council members regarding their business and customers. Remind these politicians that our industry pays taxes, employs thousands of their constituents, contributes to the community, and pays leases and property taxes.

Regarding the CFPB (U.S),  we have personally met with the head of the CFPB and various Asst. Directors of the CFPB. Our takeaway is that they are focused on transparency and disclosure of all fees rather than some Machiavellian legislative initiative.

International entry into small-dollar micro-lending continues. Payday loans, installment loans, car title loans, line=of-credit loans, etc., are offered in the U.S., Canada, the U.K., Australia, Poland, Latvia, Mexico, Latin America, South Africa, and more. Interestingly, companies with international small-dollar micro-lending success are entering the U.S. despite the perceived regulatory climate.

Payment Processing may be the most dynamic area today for the small-dollar loan industry today. Crypto and the lightning network are already upending our sector. Signup for our free monthly Newsletter for breaking news about vendors offering state-of-the-art platforms that eliminate chargebacks, ACH fees, and deliver instant funding for pennies.

Bottom line: This is the time to be a lender to the masses. Opportunity is the word of the day. For those of us willing and able to envision what new loan products and delivery systems should look like, the “world is our oyster.”


62.5 Million Households Need Access to $400 Cash Fast

Approximately 50% of U.S. households [PEW] cannot access $400 cash when faced with a sudden financial emergency! That’s 62,000,000 million households! 🙄 And this trend is getting worse!!


Stuff happens. The get-to-work car breaks down. You need to fill a prescription. Your bank dishonors your check to one of your utility companies. Your check bounces! You owe the bank $37. You owe your utility company for last month. They charge a late fee, a reconnection fee, and threaten to turn off your electricity, water, gas… Maybe you’re self-employed. You’re a small contractor. You got the job but you gotta make payroll 2X before the homeowner pays you. Unable to make payroll, your crew will revolt! Yada, yada, you need cash ASAP for any number of reasons. What to do?


Again, that’s the question roughly 62,5M U.S. households – and growing – face every year!


Solutions? Beg, borrow, steal from friends, family, strangers… Your credit card – if you even have one – is maxed. You’re too embarrassed to borrow from friends and family again. Plus, they are in the same boat you are. Church? Maybe.


My readers likely can’t relate to any of the above situations. But, millions of good folks face these situations every year.


So, as an entrepreneur and an investor, how do you fit into this picture? How do you serve this 50%, help them solve their money challenges, help them keep their dignity, and earn a superior ROI on your inventory: MONEY!


That’s right. MONEY! Your inventory is CASH. Not flowers that die. Vegetables that rot. Not ice cream that’s messy and melts. Not greasy mechanic shops, a franchise you must pay up 8%/month to your Franchisor. There are zero better businesses to be in than lending money to the masses.


Here’s why. Next Post coming this week. Signup to be on the list:


How-to: Installment Loans for the Subprime Demographic

Example Nevada Installment Loans

There is a national trend by regulators to mandate a 36% APR [Annual Percentage Rate] cap throughout the USA.

Many national Lenders have been transitioning to a multitude of financial loan products in an effort to continue to serve subprime borrowers while still achieving superior ROI. Witness Avant, CURO, WRLD, ENVA… You only need to refer to their latest earnings call to comprehend the extent of this transition away from single-payment products. Enova’s progeny is back in the late ’90s. At the time, they offered singularly payday loans having 400% – 700% APR payday loans. As per their latest Q4 earnings call, these single payment [payday loan] products made up a mere 2% of loan originations. Obviously, they see the writing on the wall.


Nevada, in addition to approximately 25 other States, has Implemented a state database. This demonstrates a death knell for the single payment product!

Luckily, we Lenders have time to evolve our Loan product offerings AND, more importantly, integrate with Fintech platforms that enable us to reduce headcount, and employ artificial intelligence [AI] to acquire, underwrite, service & collect funds without the aid of human intervention; thus reducing our G & A expenses. [Examples: for 24/7/365 debt negotiation & for wages & income verification.]


Grab a copy of our latest version of “How to Lend Money to the Masses Profitably.” 500+ pages of real-world, how-to start, scale, improve and succeed lending cash to the 50%+ of USA households who are FAST running out of money and cannot access $500 cash in order to solve a sudden financial emergency. [Fix their car, keep the lights on, pay for a prescription, make payroll for their construction crew until paid by the homeowner…] For a mere $297.00, you can download our 500+ page PDF and enter/improve/scale a consumer loan business! The business of lending to the Masses. The oldest profession 🙂

How to Start a Payday Loan Business


Fintech Loan Executive Available

Experienced Online/Fintech B2C Leader Available. 

I enable my partner clients to create high-performing, user-friendly lending systems and platforms with a focus on digital lending and multi-channel delivery via both State & Tribal lending models.

I have nearly 10 years of successful experience building tribal & state-licensed online lending models as CEO, COO:

  • Launched & managed multiple multimillion-dollar [USD] online B2C small-dollar, subprime short-term installment loan portfolios.
  • Highly competent in managing Tribal Council relationships & building infrastructure.
  • Skilled at capital raises.
  • Highly proficient at enhancing portfolio ROI’s via AI [Artificial IntelligenceI] machine learning, and transitioning storefront lenders to online lending.
  • Omnichannel marketing/customer onboarding/retention.
  • Data analysis & Modeling (KPI). Segment ROI. Risk vs Profitability.
  • Risk management & regulatory compliance for all federal, tribal & applicable state laws.
  • Call center operations.
  • Payment processing
  • Banking & law firm relationships for subprime lenders.
  • 3rd party vendor vetting & negotiations…  
  • I will consider both full-time, remote & on-site collaborations. Open to relocation.

Let’s jump on an introductory call and explore! 



Lending to the Subprime Masses

Your subprime consumer borrowers are searching for you. Money lending is scaling up again. Your brick-n-mortar customers are simply not coming back. Embrace digital channels, AI, smartphones… or DIE.
Here are keyword search trends for December 2021 for Lending Money to the Masses [USA only] “Cash Advance,” “Payday Loan,” “Personal Loan,” “Title Loan,” “Car Title Loan.” Need leads? Need consulting? Reach out! Our Team is ready to help! State licensed and & Tribal Model. #Consulting #Lending #Fintech
payday loans, car title loans, personal loans

Heads Up: Debt Buyers Paying More for Our Bad Paper

Just a quick note. Debt buyers are in a state of frenzy. Payday, installment, car title… lenders are working their bad debt longer than normal. Why? Our subprime borrowers are sitting on a ton of cash. Our collection Team is experiencing more than usual success.

As a result, bad debt buyers are paying more for our bad debt!

If you do want to unload any bad paper you’ve been working in house, let me know. I’ll connect you direct.

Meanwhile, new loan originations continue to trend up. FOMO about omicron variant potential lockdowns, inflation, record low employment, record new business formations by sole-proprietors… continue.

December is OURS!

Jer – 702-208-6736 Cell

https://theBusinessOflending.comJer Ayles, Consultant: How to Start a Consumer Loan Business


“The Payday Loan Puzzle.”

“FACT: Two-thirds of individuals who use both credit cards and payday loans have at least $1,000 of credit card liquidity left when taking out a payday loan.”

The term “Payday Loan” comes with more negative connotations than the term “carpetbagger” did after the Civil War. Our industry, “the business of lending to the masses” has evolved from old-school, analog face-to-face paper transactions, to digital customer transactions including acquisition, underwriting, funding, servicing, and collecting while reinventing the nomenclature from payday loans to installment loans, line-of-credit loans, early access to wages, buy-now-pay-later, pawn…

The bottom line? 50%+ of households are one paycheck away from being homeless.

This behavior – resorting to costly alternative loan products by consumers rather than maxing out their credit card – is puzzling because payday loans carry very high-interest rates [when erroneously computed as an Annual Percentage Rate. Much like choosing to take a cab/Uber from New York to Los Angeles], compared to 10 to 30 percent APR’s on credit cards.

This “mistake” is costly: these people could have saved $200+ annually by borrowing up to their credit card limits before taking out payday loans.

“This phenomenon has been termed the “Payday Loan Puzzle.”

Why do households take out expensive payday loans when they have far cheaper credit options available?

“Various behavioral explanations, such as self-control problems and financial illiteracy, have been put forward. In this paper, we propose a novel rational explanation for the payday loan puzzle, inspired by the following interview of an actual payday lender:

“Why are people taking out [payday] loans instead of using their credit cards?” Tim Ranney told me, “This guy was implying that these people weren’t smart enough to make the ‘right’ decision. I laughed in his face.‘They’re protecting the card! ’I told him. […]” Whereas failure to repay a payday loan won’t affect a consumer’s credit score, failure to repay a credit card will.— Lisa Servon (2017): The Unbanking of America.

“Our proposed “reputation protection” hypothesis is that people do not exhaust their credit card limits because they want to protect their credit scores. A credit score is a statistic computed by credit bureaus to access a person’s default risk.”

“Borrowing or defaulting on credit cards will affect one’s credit score, while payday loan lenders in the U.S. do not report defaults to the traditional credit bureaus!”

Reader, Click here to read this academic report in its entirety.



How to Loan Money to the Masses Profitably

Consultant: The Business of Lending to the Masses 

To be successful as a lender – or in any other entrepreneurial endeavor – you only have to be good at a few things:

·       Picking the right business niche

·       Raising money

·       Hiring good people

·       Ability to iterate through your challenges

·       Be Bold. Go where others fear to tread.

Let’s get real! Lending money to the masses can be very profitable!

We are rapidly becoming a nation of “haves” and “have not’s.” The average U.S. worker is paid $23/hour. In real terms, $23/hour has the same purchasing power as $6/hour 40 years ago. The result? Staggering household debt! [Yes, I know! Many of you are reading this Course as you sit in Australia, Europe, the Islands, China… It’s the same theme everywhere. The business of lending money.]


80% of the U.S. is living paycheck to paycheck! [] One in three people are subprime borrowers.[<620 Credit Score.]


Two in five U.S. adults do not have access to $400 cash immediately. Not in a bank account, not on a credit card, not under the mattress… They’ve already borrowed from friends, family, their church… Nowhere to turn but to YOU!


What’s this mean to you? OPPORTUNITY!


The team at Trihouse will teach you how to loan money to the masses without getting your ass handed back to you. Yes, for many of you, reading this tomb will be PAINFUL! It’s the price for entry and success.


The loan products discussed here are installment loans, payday loans, signature loans, car title loans, personal cash advances, merchant cash advances, business to business loans… Call them what you may. All of them can be very profitable.


Real-world example?

In California and Texas, we’re charging $15 to $30+ for every 14-day loan we make. [Depends on the state licensing model used or the Native American Tribe we collaborate with.]


That’s a 400%+ annual percentage rate (APR) for a borrower to use our money for two weeks!


We’ve had stores reach $10,000 in loans after only being opened 3 weeks; within a year, $100,000 on a good week and generating $50,000/month in fees.


Online lending?

Sure. Lenders have costs. Payroll costs, utility costs, website costs, merchant processing, rent, legal, taxes… but you get the picture.


A lender’s inventory is MONEY!

It’s not flowers that die on you. It’s not food that rots. It’s MONEY, MOOLAH, COIN, DINERO, SCRATCH, DOLLARS, EUROS… NICE!!

DONE! I’ve established that the business of lending money to the masses can be very profitable!


Raising Money

This is a mindset. It’s about the presentation. Practice getting good at distilling your idea into a bite-sized amount. Get your business launched.


I’m not talking about immediately achieving a huge scale. Just get your loan business open for business and fund a few loans. Storefront, Internet, monoline, combo… just fund a few loans!



Friends, family, peers, members of your network… will find out what you’re doing.


They will want to learn more.


Don’t be shocked when they say something along the lines of, “I have $20K sitting in the bank earning 1% per year before taxes and inflation. Could you put my money to work in your new business?


Of course, you can! Offer them 6%, 8%, 10%+ per year. You can afford it when you’re grossing 500%+ APR’s on your loan portfolio!


NOTE: Not sure how I’m calculating these APRs? Go here: Sample APR Calculations


Hiring Good People

  • If you’re good at raising capital, you can hire people to do everything else.
  • You can hire a CEO.
  • You can hire a lawyer.
  • You can hire an experienced customer service representative.
  • You can buy “off the shelf” loan management software.
  • You can subscribe to a sub-prime consumer credit reporting service [CRA].
  • You can hire great people to do any part of this business you choose to.



To hire right, you need a big funnel. You have to sort through a ton of leads.


You need a system; an on-boarding process.


You’ve got to learn how to do this! [This intel is in this Course.]


The quality of your life is about the people around you.


Everything bad that happened to you in the last 10 years did not happen in a bubble. 


Someone either DID or DID NOT do something to you. 


That’s life. 


Most problems in life are people problems. 


We let the wrong – or right – people into our lives. 


In business, there are some whack jobs! Don’t let them in!


Now go out and BE BAD! Jer –

Jer Ayles, Consultant: How to Start a Consumer Loan Business

Published by

Consultant: The Business of Lending to the Masses
How to Loan Money to the Masses Profitably. A few words about small-dollar lending in today’s environment by Jer Ayles, Partner at Trihouse Consulting. We began our journey as Lenders! We’ve “worked” deep in the weeds. Zero academics here!

Who Gets Payday Loans Today


Several industry-sponsored studies have surfaced recently to determine who gets payday loans today. They are interesting but offer few surprises. The studies simply emphasize it’s the same demographic with a twist. Gig Workers are now in the mix. Again, rather obvious.

In a nutshell, THERE IS NO MAGIC to identifying the payday loan demographic. Payday loan borrowers are the 99%. Retail, health workers, service workers, office, administrative, gig…

How to start a payday loan business. Start a car title loan company

Here are a few takeaways.

Payday loans are used by people who need CASH FAST and lack other financial options for repairing their car, keeping the lights on, paying for prescriptions, filling the pantry… in other words, unexpected expenses.

So, what’s good about payday loans? Virtually anyone who can breathe & has proof of a regular income and a bank account can gain access to cash when facing a sudden cash crunch.

What’s bad about payday loans? They are not amortized. The payday loan borrower must come up with the loan principal on their next payday.

The majority of payday loan borrowers do not abuse this feature. Say they live in California. They borrow $100. In reality, the payday loan lender advances the borrower $85. two weeks later, on payday, the payday loan borrower returns to the payday loan brick-n-mortar store or the internet portal and pays back the $85 loan principal + $15 fee. No biggie. That’s the legal rate in California for payday loans.

But, of course, there are always borrowers on the margin who abuse this simple transaction. Two weeks go by, the payday loan borrower is still in over their head and they pay the $15 BUT fail to add any $$ towards the original $85 loan principal. This goes on for weeks! Week after week, they pay the $15. Before long, they’ve paid $300/$400+ in $15 increments and still owe the payday loan lender the original $85 loan principal. NOT A HAPPY ENDING.

At some point, the majority of payday loan lenders implement a policy of insisting the payday loan borrower begin adding a minimum of $20/week to the $15 fee in an effort to force the payday loan borrower to pay down the loan principal. It’s simply the right thing to do!

Back to alternatives for solving the emergency financial challenges faced by potential payday loan borrowers; their ONLY alternatives are:

  • Friends & family [Usually, they’ve already hit up friends & family. not an option + embarrassing]
  • Their church [Rarely a viable alternative + embarrassing]
  • Bounce a check and incur a $35 NSF fee [Result is a bank “loan” having a minimum 1800% APR & potential Check System database entry. That results in their NEVER having the ability to participate in the banking system again! BAD!!]
  • Get a payday loan [Typically a 400% – 600% APR] online or at a Storefront location
  • Go without lights, car repair… – lose their job [Not a good choice], forgo that prescription [Ugh!], etc.
  • Go hungry/suck it up
  • Borrower from their employer

NOTE: Quite frankly, PAYDAY LOAN products are dinosaurs! Virtually all forward-thinking payday loan lenders have evolved to various types of “installment loans, line-of-credit loans, even buy-now-pay-later” [BNPL] forms of payment. [These BNPL financial products are often worse than old school payday loans because consumers OFTEN fail to realize the payments eventually do come due and they simply forgot! The free interest evaporates and the late fees kick in.  It gets REAL UGLY fast. But, this issue is another Post.]

  • Fact #1: The overwhelming majority of payday loan recipients (82%) have full-time jobs. When you add the number of recipients that work part-time or are already retired, that accounts for well over 90% of recipients.
  • Fact #2: Payday loan borrowers work in sales, office, gig jobs, food service, and healthcare support.
  • fACT 3: The most common employer of payday loan borrowers is Walmart, followed by Kaiser, Target, Home Depot, major restaurant employers, Uber, and Amazon
  • Fact 4: The majority of payday loan recipients are employed full time
  • Fact 5: Payday loan borrowers use payday loans to cover the timing mismatch of having an expense coming in before the paycheck arrives to cover it.

→ Limited time inflation relief pricing: Save $147.00

Limited Time Inflation Relief Pricing $147 Off ends in