Due to ever-increasing strains brought on by the seemingly terminally-ill economy, thousands of small business owners across the United States are making payroll through the pawning of their possessions. The trend has been noted by pawnshop owners from New York to Los Angeles. While the typical pawnshop exchange is a matter of a few hundred dollars or maybe a grand or two, small business owners are putting up Rolex collections and diamond rings that net them $15,000-20,000 at a time. The select minority is engaging in this behavior to take advantage of a swelling precious metals market, but the overwhelming majority is pawning items for payroll because they have no other choice.
Websites like Pawngo.com are ballooning because of this trend, with the stand alone mom and pop pawnshops picking up the slack. The reasons, apart from the fact that economic environment is forcing it, are that unlike bank loans and other more traditional lending options, pawning valuables is a way for businesses to acquire quick cash without credit checks or the risk of long-term damage to credit. It’s an in-and-out process that takes minutes with little financial risk. For small business owners, to which payroll is limited and so are lending options, no other choice makes sense.
For other small business owners who aren’t in financial straits, the pawning option is an opportunity to cash-in on the rising price of gold and other precious metals. Instead of selling the gold in a more traditional exchange which includes a capital gains tax, folks are settling on the relatively low interest rates applied to monies deposited into a bank account. Either way, there’s a high dollar charge on the movement of gold, but through pawning there’s opportunity to turnaround and invest the big chunk of capital right away. The time is now for those with large amounts of gold, diamonds, and silver to sell their precious metals and gems due to a global skyrocketing of value, and those with keen business sense aren’t wasting any time.
But for the majority of small business owners utilizing pawnshops, it’s all about payroll and making the remaining ends meet on time.
Does this trend indicate that “Small Business Pawn Manhattan” is going to become as popular a neon sign as Bail Bonds Las Vegas”? Probably not given that the rising value of precious metals and gems is historically only a blip. These prices rise and fall all of the time and when the market becomes super-saturated with gold and diamonds the bottom will fall out and small business owners will lose incentive to sell jewelry. But this trend does act as a startling tell for what kind of hardships our small business leaders are having to go through these days. Using pawnshops for payroll used to be the sign of a serious problem in the way your business is being operated. These days it’s just like a visit to the bank.