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Pawn loans offer quick access to working capital in exchange for collateral guarantees.
Pawn shops offer short-term loans that are secured by something of value, such as jewelry, coins, tools, musical instruments and firearms. To take a loan, you must provide identification, a description of the item and proof of ownership. The pawnbroker will offer you a portion of the item's worth in working capital and will hold your item until you repay the loan, plus fees, in full. If you cannot pay back your loan on time, some states allow extensions, with a portion of the interest owed and a pre-set number of additional days to pay off the loan.
Pawn shop loans are state-regulated and carry finance charges typically from 5% to 25% per month. Pawn shops are required to report to local law enforcement agencies, sometimes daily, including sensitive information about the borrower such as ethnicity, gender and personal address.
Pawnbrokers can offer a quick way to borrow money without requiring a credit check, but it comes at a price.
Pawnbrokers are governed – and limited – by the federal laws that apply to traditional financial institutions. Since the maximum amount allowed on a pawn transaction is set by state laws, a pawn shop loan may not be a good fit if you need a larger infusion of working capital. Pawn shop loans are based on the value of your items, not your credit rating or pay schedule, so the size of your loan is also limited by the worth of your collateral.
Further, you'll incur additional charges if you can't pay your loan by the due date, so it's best to be certain you can hit your deadline before taking a pawn shop loan.
If you need the flexibility of extra funding quickly, lenders like Kabbage are a great way to get ongoing access to working capital that can help you cover unexpected expenses. Through the simple, online approval process, we look at your business data to quickly provide access to up to $250,000.
Qualify for a line up to $250,000
Accessing small business funding shouldn't be complicated or time-consuming, so Kabbage developed a simple way to get up to $250,000.2.