Upmarket Customers Take Pledge To Get Cash
Monday, 16 February, 2009
Struggling businesses are increasingly turning to pawnbrokers, pledging anything from yachts to diamonds, to solve cash flow problems brought on by the banking crisis.
The National Pawnbrokers Association said business loans were becoming more popular in the industry as smaller companies could no longer rely on credit from the banks to pay suppliers or employees. Jim Tannahill, director of Suttons & Robertsons, the upmarket London pawnbrokers, said: “The number of people coming to us to keep their own little businesses afloat has risen dramatically.”
While the average loan at a pawnbroker is slightly more than £100, business clients typically pledge expensive watches and jewellery on loans ranging from £5,000 to £10,000.
Borro, the first online pawnbroker, said half of its revenues now came from business owners – the majority of whom have never used a pawnbroker before. Many are involved in seasonal businesses or are facing short-term cash flow problems due to late payments.
Paul Aitken, who founded Borro with two venture capitalists last year, said: “Quite a lot of the customers are also property dealers. They’ve sniffed out a good deal but they can’t quite get the leverage they used to be able to get from the banks so they have to bridge the gap somehow.”
Pickwick Pawnbrokers, a small chain based in the south-east, is even investing in a new marketing campaign and training programmed to help target their new corporate customers.
While a company director’s Rolex watch is a common offering, Borro’s online operation allows them to lend against a wider variety of goods.
Mr. Aitken said they had lent against yachts, antiques, bags of diamonds, gold bars, paintings and even memorabilia such as rower Steve Redgrave’s singlet from the 1996 Olympics.
One business owner took a £10,000 loan out against his Ferrari due to a customer paying late. They have also had enquiries about Picasso sketches and a Lear jet.
Borro’s form of remote pawn broking, whereby most items can be sent via courier to a central London vault, is also appealing to wealthy clients who have suffered mass job cuts in the finance sector and falling house prices.
“We’re making pawn broking accessible to people who don’t want to be seen doing it on the high street,” Mr. Aitken said.
Source: http://www.ft.com/
