Should small businesses get a loan from a pawn shop?
More and more small businesses are looking to pawn shops as a way to bridge an immediate cash shortage because it’s fast, easy and loans are based on the collateral and not their credit history.
“We’re seeing more and more high-dollar loan amounts and more people who are sole proprietors or small business owners needing a loan to either start their business or who need extra money to close a deal,” says Diane Taylor, owner of 60-year old Traders Loan and Jewelry located in Reseda, California.
“It was more common for people to get loans to meet individual needs like making their car payment or paying for health care. We still cater to them but over the last couple of years we’ve seen a big increase in small business owners who need quick cash and are lucky enough to own some quality items like diamond rings or a high grade watch,” Diane continues.
Keep in mind that there is still the Small Business Administration that can help you get your business off the ground, but only if you have time to plan. Many sole proprietors operate with little to no savings combined with a poor credit history and need money fast.
There are typically two types of businesspeople who need quick loans. The first is an owner who needs to purchase more inventory, cover bonuses or is in between commissions. The second are the big money makers but their assets are tied up in things like art and diamonds, for example. It’s rather difficult to walk into a bank and say that you’ve got some quality assets and ask for a couple of hundred thousands dollars. Fast. Pawnshops are great because high quality items can easily go into pawn to cover your expenses.
Pawn shops can be a great benefit over other ways to get cash. The first is that we don’t require a credit check and will not hurt your credit score if you’re unable to make payments on your pawned item. We are also heavily regulated by California law.
“People who pawn their items take their loan more responsibly because there is something about pawned personal items that retain a sentimental value. We have a 95% redemption rate of people who get their items out of pawn,” said Diane.
There are other options such as credit unions and community banks who have been more open to working with small businesses than big banks but if speed and convenience are a preference a pawnshop is a great way to go.