Funnily enough, now wouldn’t be such a bad time to start a bank. Public confidence in the banking system may be at an all-time low, but that doesn’t make the business model defunct. In fact, super-low interest rates, combined with a healthy supply of businesses desperate for credit, makes 2009 the ideal year to get started. According to SmartMoney.com, the three-year failure rate for brand new banks is less that one in every 1,000 – an encouraging ratio when pitted against the perilous failure rate of pubs and restaurants, both ventures that attract entrepreneurs in drooling flocks.
To get started, you’ll need a bunch of like-minded entrepreneurs, each with at least £50,000 to pump in. The rest of the cash can be raised by issuing shares to local investors and businesses. While much of your start-up investment will be burned by marketing costs, consider the pitch: a local bank, lending to local businesses, free of toxic debt, providing a much needed community service. All you have to do is earn more on your lending than you pay out on your borrowing. Oh, and avoid collateralized debt obligations.