Subprime Loan Business:
1. America Is Drowning in Consumer Debt
2. Big Banks and Credit Unions Want Nothing to Do with Them
3. Digital Lending Is the New Frontier
4. The Margins Are Insane
5. The TAM Is Jaw-Dropping
6. Investors Are Paying Attention
7. Compliance Is No Longer the Barrier It Used to Be
If you’re in the business of lending money to subprime consumers, you already know the stakes: high reward, steep learning curve, and a golden opportunity hiding in plain sight.
Most of the so-called “literature” on the subject?
Too academic.
Too theoretical.
Or just plain clueless when it comes to lending to real people with thin credit files, unpredictable income, and zero traditional collateral.
Let me be blunt: this is the most profitable moment we’ve seen in two decades for launching or scaling a subprime loan business.
Storefront or online.
Installment loans, payday loans, car title loans, or personal LOCs?
It doesn’t matter.
Demand has never been higher.
Technology has never been more accessible.
And the potential margins? Mouth-watering.
Here’s why.
U.S. household debt has hit a record $17.5 trillion.
Delinquencies on credit cards and auto loans are spiking to levels we haven’t seen since the Great Recession.
Bankruptcy filings have now increased for 19 straight months.
The result?
Tens of millions of credit-challenged Americans are effectively locked out of traditional credit sources.
Meanwhile, 60% of U.S. workers live paycheck to paycheck.
Even 40% of households earning over $100K say they’re scraping by.
Translation?
A massive and growing population of hardworking adults needs access to small-dollar loans just to keep the lights on.
2. Big Banks and Credit Unions Want Nothing to Do with Them
Traditional financial institutions have pulled out of the short-term loan business.
The risk is too high, the margins too low (for them), and the customer service requirements too intensive.
They’ve abandoned the space and left a wide-open lane for savvy operators like you and me.
3. Digital Lending Is the New Frontier
Smartphones have completely transformed consumer expectations.
If you’re not delivering loan products digitally, you’re invisible.
But here’s the good news: launching a mobile-friendly, online-first lending business is cheaper, faster, and easier than ever before.
Modern LMS platforms, automated underwriting, ACH disbursements, SMS communication, ID verification, all of it can be outsourced or bought off the shelf.
That means you can focus on marketing, underwriting, and collections, the real money-making activities.
4. The Margins Are Insane
A well-run consumer loan portfolio can easily deliver 400%+ APRs.
We see fees between $15 to $30 per $100 borrowed on two-week terms.
Think about that.
With the expert underwriting and collections processes, you can recover your capital in 14 days and then redeploy it again, and again.
(Example: Charge $15 on a $100 loan for 14 days.
Multiply by 26 loan cycles per year = $390 interest on $100.
That’s an APR of 390%.
If you charge $30, that’s a 780% APR.
Real numbers.
Real margins.)
Importantly, this strategy does not require you to fund the same borrower repeatedly.
You’re not promoting rollovers or trapping borrowers in a debt cycle.
Instead, once the initial 14-day loan is repaid, that $100 principal can be lent to a different borrower entirely.
Your capital keeps working, but your exposure to regulatory criticism around ‘endless debt’ or ‘loan stacking’ is neutralized.
This is not theory.
This is real.
Our well-capitalized clients routinely build portfolios generating $50,000+ in monthly fee revenue within 12 months of launching.
(According to Experian and Oliver Wyman, over 50 million American adults fall into the subprime credit category, making this one of the largest underserved financial markets in the country.)
(“There are 50 million subprime adults in America” is well-supported by recent data.
According to a 2022 report by Oliver Wyman, approximately 57 million Americans have credit scores that classify them as subprime, meaning most lenders wouldn’t offer them credit at standard interest rates.
Additionally, a 2021 Experian study found that nearly 1 in 3 U.S. consumers had a credit score below 670, which is often considered the threshold for subprime classification.
Given these figures, stating that there are 50 million subprime adults in America is a conservative and accurate estimate.)
5. The TAM Is Jaw-Dropping
- There are ~50 million subprime adults in America.
- The average payday or installment loan is $300 to $1,200.
- Many borrowers return to the lender multiple times per year. Do the math.
- This is a multi-billion dollar opportunity.
- You can start with a single storefront or a solo online launch.
- Once you have your model, your metrics, and your marketing dialed in, scaling is a matter of capital and repeatable systems.
6. Investors Are Paying Attention
- Private equity firms, venture capitalists, and family offices are finally waking up to what we’ve known all along:
- subprime lending is recession-resistant, counter-cyclical, and delivers some of the best risk-adjusted returns in the financial services sector.
- They’re no longer funding credit card startups.
- They’re backing online installment lenders, title loan platforms, and cash advance APIs.
Why? Because the numbers don’t lie.
7. Compliance Is No Longer the Barrier It Used to Be
Yes, you need to understand your state’s laws. [Unless your launching a Tribal Portfolio!]
Yes, you’ll need proper documentation, disclosures, and processes.
But thanks to organizations like us, Trihouse Consulting, you don’t have to figure this out alone.
We’ve been doing this since 1997.
We’ve launched hundreds of successful lenders.
We’ve got templates, tactics, and trade secrets you won’t find anywhere else.
Want to Get Started? Here’s What to Do Next
Schedule a FREE 15-minute strategy call with the Trihouse Team.
We’ll help you assess your goals, your capital, and your most strategic entry point.
Or, invest in the ultimate guide to launching your own subprime loan business: How to Loan Money to Strangers Without Getting Your Butt Handed to You.
This is the playbook.
The blueprint.
The “bible”.
If you’re ready to get serious, we’re ready to help you win.
Visit: TheBusinessOfLending.com