The business network, CNBC, recently published a story that reveals how wealthy entrepreneurs are turning to pawn shops to fund their new business ideas.
The story focused around several wealthy entrepreneurs who pawned expensive Rolex watches and private art collections for quick cash. Some of those loans were over a million dollars. That’s a lot more than the average pawn shop loan, which is $150 dollar, according to the National Pawnbrokers Association.
Business owners told CNBC they turned to pawn shops for loans because they needed fast cash for business opportunities. A loan from the bank would have taken too long to secure, potentially losing a business opportunity.
Entrepreneurs Turning to Pawn Shops for Business Deals
In Denver, a pawn shop gave a credit line of $50 million to a family office, which is the financial advisor to the ultra-rich.
One entrepreneur used his watch collection to close a $400,000 commercial real estate deal. He spent 10 years trying to obtain this coveted piece of property. When it became available, he had only one week to come up with the funds. A bank wouldn’t provide him a loan on such short notice, but the pawnshop did in 48 hours.
The Changing View of Pawn Shops in New York City
Provident Loan Society of New York is also seeing a rise in entrepreneurs and business owners turning to the collateral lender for short term loans. Millennials and business owners are among their fastest-growing customer base.
The nonprofit lender recently launched a Fast Cash Calculator to help business owners and entrepreneurs learn how much a loan will cost with Provident Loan Society. The Fast Cash Calculator reveals the fees and interest rates.
Provident Loan Society has been a trusted lending source to New Yorkers for over 100 years. Since it’s a nonprofit, Provident Loan Society typically has lower interest rates than traditional pawnshops (26% versus 48%). It also provides a longer payback period for the loan of six months versus four months.
About the Author
Charlotte Knobben studies journalism in The Netherlands and currently lives in New York City.