Could pawn brokers help your business grow?
If there is one grouch that unifies pretty much all sign making businesses it is the eternal problem of getting the banks to help with investment
Friday, 22 Nov 2013 12:38 GMT
Traditional finance: could pawn brokers help when banks refuse credit
The big name banks are often accused of not lending to small and medium sized firms, or of making the terms and conditions so unattractive that sign-making companies back off from investing or seek other forms of finance, such as family, friends, and business partners.
One source that comes under the title of traditional finance is the pawn broker. As with the domestic market, the pawn broker loans are secured against goods with interest and an agreed time frame for repayments. One such company is Borro, which make loans to small businesses secured against prestige cars, jewellery, and high-value personal items owned by the sign-maker.
With the initiatives introduced by the Government still not easing the capital battle; there is still a demand for small business owners to access finance quickly. ”
The personal asset lender says they have seen an increase in loans to small and medium sized companies because of the difficulties the industry has found in getting banks to back expansion plans. In a survey they conducted, they say around 40 percent of firms have been turned down by the high street banks and a quarter do not even bother to ask. The figures given are likely to ring true with many printers in the current economic climate.
The pawn broker says a transaction with Borro is transparent, with all rates and processes made clear from the outset with no credit checks, while the loans can be redeemed at any time without penalty.
Paul Aitken, CEO of Borro, says: “A dramatic shift is needed for smaller business owners to feel they can gain access to much needed finance. With the initiatives introduced by the Government still not easing the capital battle; there is still a demand for small business owners to access finance quickly. This may be to ensure the business is able to take advantage of growth opportunities or address cash flow problems before they escalate. Our research demonstrates that this demand is not being met by banks and other traditional lenders.”
With the economy set to expand slightly next year according to most pundits, investment in new kit, premises and staff is something on the agendas of many in the sign-making industry. If the banks prove to be a cul-de-sac for firms seeking a road map to expand, then, if by good fortune the owner of a company has something of value, such as antiques or paintings, then maybe a visit to the pawn shop could free up capital. Last year Borro say they lent small and medium sized enterprises £29m, with the average loan amount for totalling £24,000.
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