INCORPORATING A PAYDAY LOAN BUSINESS IN MEXICO

INCORPORATING A PAYDAY LOAN BUSINESS IN MEXICO

5 LEGAL CONSIDERATIONS YOU SHOULD KNOW

As the Payday Loan industry continues to gain momentum in Mexico, foreign investors eyeing opportunities in this sector must be well informed about the legal framework governing their business operations.?

Here we aim to shed light on 5 important legal aspects that foreign investors should be aware of when incorporating a Payday Loan business in Mexico:

1.What is the best corporate vehicle to do so?

It depends on many factors but to keep it simple, if PDL will be your only product you′ll be fine with a SAPI avoiding the regulatory workload that incorporating a SOFOM usually implies.

2.Main Regulators:

Among the main regulators are the National Commission for the Protection and Defense of Financial Service Users (CONDUSEF) and the National Banking and Securities Commission (CNBV). These entities uphold consumer rights and regulate financial services, including PDL providers.

3.Interest Cap Rates:

Currently, Mexico does not impose a specific cap rate on PDL.

4.Anti-Money Laundering (AML) Compliance:

Foreign Investors must familiarize themselves with Mexico′s AML regulations. Complying with these regulations is vital to prevent any potential involvement in illicit activities and the safeguarding of your PDL business′s reputation.?

5.Expected time to incorporate a PDL business.

Depending on business model and the corporate structure it usually goes from 6 -10 weeks to get a fully operational SAPI, meaning the company not only has been incorporated but also has open its bank account and has get its own Tax ID.

Author - Héctor J. Otero