Q: What are the legal requirements to start a micro finance business in South Africa?
Q: How do I register as a credit provider?
Q: Do I qualify to register as a credit provider?
This is a question people often ask. In short, if you’re older than 18 years and you’re not a fraudulent crook, then you’re good to go. For the full list, you can scan have a look at this infographic.
Q: I’ve registered as a credit provider, now what?
Once you are registered with the NCR, you may legally enter into credit agreements with consumers.
Q: What software do I need to successfully run my micro lending business?
In order to take the hassle out of running you micro lending business, having software that process your admin is a must. A client & loan administration system will help you manage your clients and loans. You also need a payment system to collect the loan instalments from your clients. We recommend Delfin.
Q: Do I need to do a credit check on a client?
Would you lend your car to someone who doesn’t have a driving license? Exactly! Not only are you required by law to ensure that consumers can afford the loan along with their monthly expenses, but failing to do so could cost you a lot of money! The Amendment to the Act specifies the new way to calculate the consumer’s affordability. Our Delfin systems have the new Affordability available to ensure you comply. You’ll also need to verify the consumer’s listed expenses against a credit bureau. Our software offer Credit Checks at no additional monthly rental, you simply pay per enquiry. The Credit Checks through our systems also upload your client and loan data to the bureaus – which means that when other credit providers perform enquiries they will be able to see your client’s loan with your business.
Q: Where can I get a quotation/loan agreement that my client will sign?
Our Delfin systems have a standard quotation and loan agreement in the system that you may utilise. You are able to change the documents to suit your requirements or you may insert your own quotation and/or loan agreement or any other document you may wish to use.
Q: Why can’t I charge 30% interest in South Africa?
The National Credit Act, that came into effect on June 2007, specifies the interest and fees that may be charged in South Africa. The NCA Review of Rates & Fees published 25 October 2015 sets out the revised fees that come into effect on 6 May 2016. If you’re a credit provider in South Africa, you need to comply with the interest and fees as set out by the regulator. Should the NCR (National Credit Regulator) investigate and find a credit provider to be over charging, the credit provider will need to refund the consumers any interest and fees charged in excess. The credit provider may also be fined and/or de-registered.
Our Delfin systems calculate the interest and fees according to the NCA. Our systems also cater for offices outside of South Africa that charge different interest types.