I consider this a public service announcement. You’ll see why in a moment.
According to CNNMoney, pawn shops have become the new bank loan. An increasing number of small businesses are bringing their Rolexes, grandfather clocks and first-born children to pawn shops the nation over:
More than half of the customers at online pawn shop, Pawngo, are small business owners, said Todd Hills, CEO of the Denver-based company.
“These guys can’t wait. They have businesses. They have employees they need to pay,” said Hills, who launched Pawngo in June. “This is a great way to solve a short-term need.”
As the article notes, the process is easy enough. The lack of credit checks certainly recommends it for those small business owners to whom paperwork is anathema. But when you take a step back, you’re struck by what you potentially have to give up in order to get the loan.
If you don’t pay the pawnshop back, after all, that priceless family heirloom is gone for good. You’re still paying back interest, and while the majority of pawnshop owners are undoubtedly good, decent people, the lack of paperwork can work against if you get ripped off.
So what’s the alternative? Try working capital. The paperwork is less restrictive than with a traditional bank loan, and the entire process tends to be much quicker. As we’ve noted before, working capital isn’t just for those who struggle to keep their credit high. It’s for everyone.
So before you slip off that $10,000 watch, try working capital. That way, you’ll have the financing you need and still be able to tell what time it is.
Have you pawned anything or sought working capital in the last year? Let us know!