Starting a Pawn Shop Business
This article briefly discusses the pawnshop business. Find out some of the things you need to know in order to start your own pawnshop business.
Pawnshops have been in existence since early history and are said to be one of the oldest trades known to humankind.
The fact that this industry still remains to this date only goes to show how solid and resilient it is. This should serve as an assurance for those who have their sights on starting their own pawnshop business.
The pawnshop industry fills a need that the banking system cannot cover. A bank loan generally takes time to process, time which the average pawn shop client does not have. The concept of easy cash is the reason why most people are drawn to pawnshops instead of banks or other lending institutions.
How exactly does a pawnshop business work?
Simply put, pawnshop owners or pawnbrokers offer high-interest short-term credit to their clients. The amount of the loan is dependent on the value of the pledged good. Compared to banks, pawnshops provide an easy and quick way to loan money.
- A pawnshop transaction can be divided into four steps.
- One, a client brings an item (usually not limited to jewelry) to be used as collateral for a loan.
- Two, the pawnbroker assesses the value of the item and proposes a loan amount. It is vital therefore for the pawnbroker to be adept in testing the authenticity and value of precious metals and gems. If the client is agreeable to the amount, he or she then enters into a transaction with the pawnbroker which culminates with the latter lending money to the client. The pawnbroker then issues a pawn ticket wherein the following information is indicated: the item’s description, the amount of money loaned, and the date the money is due back.
- Three, the client repays the loan after the given period of time and gets the pledged item back.
- Four, in case the client fails to repay the loan, the pawnbroker gets to keep the item.
How to get a pawn shop license
No person can run or operate a pawn shop business without a license. To get a license, you must first accomplish and submit a pawn application form to the Non-depository division of your state’s Department of Financial Institutions. Subsequently, you also need to pay the stipulated application fee which on average ranges from $1,500 to $2,000 per branch.
- You will then be required to submit the following supporting documents to verify your financial standing and character.
- A comprehensive financial statement duly verified and prepared by a certified public accountant. Your aggregate net worth and liquid assets must meet the minimum amount set by your state.
- A credit report for your business so it is best to have this report on hand.
- Written proof that you have garnered the required minimum number of years of finance-related experience.
- A criminal record report from the state police where you reside.
- Reference letters preferably come from depository financial institutions.
You will be given a pawnbroking license only after your application has been approved. Once you have your license, then and only then can you be deemed authorized to launch and operate a pawnshop business.
This Video Explains How a Pawn Shop is Operated
- Do You Know What Pawn Shops Take
It is definitely good to know what do pawn shops take since this will be the basis of how much money you can actually borrow when you are in need.
- How a Pawn Shop Works
Do you have some ideas on how do pawn shops work? If not, then this article will give you some insights how this money-spinning business works well.
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1. How much should the aggregate net worth be? US$ 1 Million or more?
2. How much should the working capital be?
2. Also i was wondering pretty much the same things as KEYS.
If anyone could help me that would be great, Thanks.
a)could you define a little more of the details of what minimum years would be ?
b)could you define what kind of related experiences would be acceptable and an example of what might be unacceptable? thanks
Startup Biz Hub - Senior Advisor (Staff)
I would like to sell some type of "franchise", where I could provide inventory and knowledge to get "you" up and operating and then provide support till "you" get it.
I of course would need to take a cut of "your" business for this. I would rather be a consultant for you than work at my brick and morter.
You could even come work at one of my stores for training. I have an open mind and would like to hear some thoughts on this idea.
Synthesizers, digital pianos, and hybrids etc. I play very seriously. That is to say.......I play....very....seriously..:) Bach, Beethoven, and the Boys! I know everything about guitars, acoustic/electric. Brass, strings, percussion, It's my greatest passion. The beauty of each and every instrument. The beautiful sadness....cheerful Ragtime.. An $200,000.00 Bosendorfer CONCERT GRAND PERFECTION! Or....a simple .25cent Kazoo ~ I love that I am one of the fortunate few, so grateful, I am always happy, even when I'm furious.. Teaching a room full of phd's the fundamentals of theory......nothing better. PLUS
I can sell. I believe in it. I'm clean cut and a seasoned pro. at forty. Been around the world to learn. 20 years! Still, there's much room for improvement. Much more to learn indeed! The economy. Nearly 50% of top-notch piano stores sank. We sank. It's been month's and my head hangs....slumped.. gets worse... you know.. A Long time ago, when i was much younger, i wound up with a felony conviction. My father, being an attorney, went home that day, and shaved his ass. That single felony has slammed every door... in my face. I thought that's what the losers said. The negative nellys. The lazy good for nuthin's that were stuck in the mud. I couldn't believe. I still can't believe. Once you've crossed into the land of the convicted, forever more, you're, "one of them." The people in this business KNOW I'm a true professional. They KNOW I recognize quality. They TRUST me, etc... But, when it comes down to making a choice, I'm a potential liability. I understand. Honestly. Not anger. Nor bitter. Nor vengeful.. nor cheated.... I respect our laws. Hopelessness is.. to slowly suffocate..out.. run out.. No wife, no kids, no, nobody really. INFJ. . . .
But sssSSSHHHH!!! ...WAIT!!! I SEEE it. IT! I'll be back in my element (sort of) with my OWN shop! I recognize quality. I know what'll sell etc... I'd create the CLEANEST TOP QUALITY PAWN SHOP ~ EVER!!! I'll need to start learning NOW! A RAY of LIGHT!! learn and learn and LEARN!!! I haven't felt ...haven't....~f e l t ~...months. Laugh! I have found The Holy Grail!!!!! I am living in the FASTEST GROWING tri-county area, in the COUNTRY! Open up the window shades! Where's my KAZOOOOO!!!! :) .....then I read about the... "no filthy felons allowed".. part email me ~ i'll send you a kazoo ~ fun!
Do you think it's smarter to start small, for the sake of small risk, with the intention of growing quickly and roughly planning for such? Or do you start bigger with a decent existing inventory and try to hit the ground running a marathon?
I have a situation where I have plenty of real estate to choose from, in all sizes, but still in an area where an establish would flourish. It gives me the ability to quickly plan for a bigger space, even on the same block, but never committing unless I had it perfect.