Tags: Pawn | Shops | Banks | lend

Small Businesses Turn to Pawn Shops as Banks Won't Lend

Monday, 19 Mar 2012 07:41 AM

A growing number of small businesses are tapping alternative funding sources such as online pawn shops and merchant cash advance providers, which provide a safety net for business owners rejected by banks.

When small business owner Fern Phillips says she believes entrepreneurs are turning to alternative funding because "there's a huge gap between small businesses and banks," Phillips told the Huffington Post.

"Big banks have the money — they're just not lending it."

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes

According to Don Battis, founder and CEO of the online pawn shop Pawntique, half of his clients are businesses. Their owners have pawned silver flatware, fine wine collections, even fine art.

Battis says demand has increased with the popularity of pawn reality TV shows, but also because pawn shops are becoming more respectable.

"Instead of just small mom-and-pop stores, these are publicly traded, professionally managed, upscale merchandising companies," he said. "I don't know if any of our customers have even been to a (physical) pawn shop.”

Customers send Pawntique a description and photo of their items, receive an initial value estimate via email, then FedEx the item to Pawntique for a final appraisal. Customers can receive their money "in as little as 24 hours," says Battis. "They like the fact that we make a decision quickly, it's through the Internet and it's confidential."

Phillips received the $20,000 she needed for additional supplies due to a client quintupling an order three days after initially contacting Pawntique, at an interest rate of 3 percent per month. "I basically paid $10 a day," she says.

Todaysthv.com reports that applications for small business loans are up across the nation.

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes



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