16 Apr Should You Consider Going to a Pawnbroker for a Small Business Loan?
Getting a small business loan is often one of the most difficult parts of turning a great idea into a profitable enterprise. This is especially true if you don’t have a good credit score or a significant asset to put up as collateral on the loan.
Historically, pawnbrokers provided loans to individuals who were having trouble getting traditional financing. But more and more small business owners are now facing the same difficulties. So’ should you consider this option for your fledgling company? Take a look at the details below to decide for yourself.
Opting for a pawnbroker loan sounds like a good idea
If you’re unfamiliar with how pawnbroking financing works, the structure of the loan works like this: You bring a valuable item into a pawnbroker and the they assess its market value. The Pawnbroker will lend you money based on a portion of the item’s value; for example, if you bring in a Rolex watch worth $5000, the pawnbroker may be willing to loan you around $2-3000
The Pawnbroker then holds on to the Rolex until you redeem your loan – with interest, of course! (see below). If you don’t redeem your loan, the Pawnbroker will simply sell the Rolex you pawned recoup the losses and if there is any money left over the Pawnbroker will return it back to you.
…..And guess what? Shhh!… Nobody knows about this, only you and the Pawnbroker!!
It’s easy to see why pawnbroker financing is now becoming a fast and attractive way to get cash for the small business owner :
- Most loans are made immediately; So’ there’s no waiting weeks for a lending decision.
- Loans can be for almost any amount; if you pawn an item of very high value, you could end up with serious cash in your pocket.
- There are no Credit Checks or application forms making qualifying for a loan easy.
- No Recourse, meaning if you don’t redeem your item, (Repay the Loan) your credit rating will NOT be affected
- I mean try and borrow money from the bank and then decide to tell them you don’t want to pay it back, they won’t be so forgiving.
“While there are no figures that track how many small businesses turn to pawnbrokers for cash, Premier Pawnbrokers is among the growing number of pawnbrokers lending to small business owners and entrepreneurs. … , The Pawnbroker has lent money to a number of business startups just getting off the ground.” including a Cottage industry Peanut Butter company, a small Tech company, and a Mr Green Franchise.
Clearly, the small business and startup communities find pawn financing increasingly attractive – but what’s the catch, I hear you say?
Well’ Because using a pawnbroker offers speed and convenience in getting a loan for your small business it could come at a price.
Many pawnbrokers have increased their respectability over recent years, but there’s still a slight drawback to their loan products that can’t be ignored and that is the redemption rates, commonly know as interest.
Remember that the Pawnbroker is offering speed and convenience over the banks and finance companies, also a “Private & Confidential service” with a no questions asked policy, “What you need the money for is your business” not ours” and as the Pawnbroker loans tend to be of a temporay nature they can’t be compared to the Banks or finance companies.
However I would say do your research as (Redemption Fees) interest differ from Pawnbroker to Pawnbroker, with rates varying anywhere from 6.95% – 40% per month so shop around!
So’ back to the Question ‘should you consider a Pawnbroker for a temporay small business loan: Absolutely would be my answer!!
The Pawnbroker the place to go if the Bank said No!,