Verify that you can open a payday loan store in your state. Learn your state's regulations and the federal Truth in Lending Act. Your state may regulate the amount of money that can be loaned, the length of the loan, the number of rollovers allowed, installment repayment plans, fees you can charge and the number of loans a consumer can take at one time or per year. If your state implements strict fee limits, verify that your business can be profitable. Additionally, there are strict rules governing extending loans to military members. It may be wise to consult with an attorney.

Select a business structure, such as a partnership, corporation or limited liability company and register your business. An S corporation is a popular choice due to the tax advantages and limits on personal liability. Once you've formed your business, write up a business plan. Present this to investors, family and friends, or banks if you intend to procure financing.

Find a licensed surety bond agent that works in the payday loan industry. (see Resources 3) The agent will review your business structure, collect documentation and send it to the underwriter. To expedite the process, prior to meeting with the agent, have an organization chart of key personnel, detailed resumes, a business plan and a continuity plan that highlights what will happen to the company in the event that you become disabled or die. Additionally, proof of a line of credit may further help your case.

Select a high visibility location that gets good traffic from low and middle-income families. Avoid high-crime areas. Safety is of particular concern in this industry. When designing your store, procure bullet-proof glass and install good lighting to deter criminal activity.

Apply for your payday lender license with your state's department of financial institutions. Visit your state's website for information on how to apply. Generally, you will be required to include a personal financial report and disclosure statement, proof of a surety bond, proof of liquid assets of a certain dollar amount, proof of registration as a corporation, partnership or limited liability company and have held a deposit account for at least one year.

Hire professional employees and train them on current regulations. Conduct drug and background checks on every employee. Ensure that they are friendly and professional at all times. The average consumer may take out up to 12 loans per year. In order to secure repeat business, you'll need an efficient staff that doesn't condescend.

Purchase payday loan software that enables you to cash checks, keep track of payment dates, amortize loans, track a variety of loan types, track employee hours, integrate fingerprint scanners, verify that customers have not exceeded their loan limits and conduct background checks. Software providers can be found online such as eChecktrac and IntroXL.

Learn what your rights are for recovering unpaid loans, such as wage garnishment, bank account levies and property liens. Follow up with customers with unpaid debt via phone. If they refuse to pay or are unable to, you may sue them or sell their debt to a collection agency. Additionally, there are state and federal limitations on the amount of interest you can charge on an overdue account. Your state may also require that you implement a repayment plan for cooperative customers.

Consider subscribing to a check database company that keeps records on consumers who cash bad checks.