You can start with a very small amount if you're planning on doing a retail brick and mortar start-up. There's been stories about people starting out with as little as 1k, but you better be a bad ass in the world of collections and underwriting! I have heard of people starting out as mobile lenders starting out with news paper ads, and craigslist postings, but its extremely rare.

As far as retail establishments go, I would say the minimum would be around 40k. Using about 10k to set up the store, and 30k to put out on the street. Putting that amount on the street at about 15 dollars per hundred per two weeks will gross you about $9000 a month before defaults.

Does that make more sense?

Well in the internet payday loan business, its all about purchasing leads to eventually gain net cash flow. Unlike your retail establishments where you physically SEE your applicant and can verify their identity, internet applications are a complete mystery. A bot could be filling out applications on the lead gathering site. The person's identity could be fraud. The internet payday loan business is about picking out the 10 right customers to fund out of the hundreds of applications you'll review.

So the expense comes into figuring out who you want to fund. Here are some quick figures.

1. On a normal given day, your database will examine as many as 1000 applications per day (assuming this is a small operation)
2. Out of those 1000 applications, you will "data scrub" about 50% of them - which means you're spending money on running credit checks and negative database checks on 500 applications per day.
3. Out of those 500 applications, you might purchase 10% of them giving you 50 apps to work with.
4. Out of those 50 apps, your manual underwriting process will kill off another 70% leaving you to fund about 15 loans.

Here are the costs involved with scrubs:

1. Scrubbing 500 applications at about .30 per app using two bureaus. Thats about $150 per day.
2. You purchase 50 apps within the mid-tier line @ $35 per lead. Thats another $1750 per day.
3. You fund 15 loans at an average of 300 per loan. Thats $4500 per day.

Lets assume its a 30 day month. That would come out to a total of $192,000 for just one month of funding. Then you have to think about your defaults, and how you're going to fund your next coming months! You can see that 400k is actually a pretty small figure in the internet lending space!

For a storefront, you are looking at 100-120k.  This includes all build-out, licensing, supplies, software and funding for 1 year.

So I think what we can all learn here is....

-Although there are "success stories" involving $1,000 lending start-ups, that is not the norm.  Unless you're experienced in lending, collections and your local lending laws you would be wise to enter the industry with considerably more capital. 
-Internet lending is exponentially more expensive to start, mainly due to the following.... 
  1.  Notably higher default rates, as compared to store-front lending.
  2.  Due to the high volume of applications/borrower's (that's the point of getting into internet lending, right?) you will have much more money on the street.  Many internet lenders
       report high profitability despite the increased default percentages, mainly due to the high volume of borrowers.  Once again, this can be very tough for most people starting in the   
       industry.
  3.  Internet technology needed to run a successful operation is more expensive as previously mentions (SEO etc).

-There is no "right" answer as to how much you need to start your own payday business.  Just make sure to know your LOCAL laws, and learn as much as you can about the industry and collections before getting your feet wet.  After all, why not learn from someone else's mistakes and to avoid them yourself?