Using Online Pawn Shops to Fund Your Business

You have a vision for growing your small business, but you’re coming up short on the cash you need to make it happen. Perhaps online pawning and personal asset lending can help you.

In this new trend, internet-based providers offer low-interest, short-term loans in exchange for your personal valuables — no credit check, lengthy application, or proof of income required.

Here’s the scoop on how online pawn shops and personal asset lending sites work and whether they’re a viable means of financing your small business.

Who Uses Them?

Paul Aitken, CEO of Borro, a leading personal-asset lender serving the U.S. and U.K. markets, says that alternative lending sites like his are popular because they bridge the financing gap for entrepreneurs, especially when it comes to securing short-term loans at competitive rates.

Although online pawn shops and personal asset-lending sites are open to consumers and small businesses, demand is largely driven by how difficult it is for entrepreneurs to secure loans from traditional lenders. According to the Biz2Credit Lending Index, small-business loan approval rates at big banks (those with more than $10 billion in assets) were only 15.3 percent in January, while small-business loan approval rates at smaller institutions (those with less than $10 billion in assets) were 49.9 percent.

Unlike traditional pawn shops, most online pawn shops handle all transactions electronically; however, a few operate bricks-and-mortar storefronts as well.

How Do You Get Approved?

Unlike traditional lenders, which usually require proof of income and assets, tax returns, a credit check, an established credit history, and a business plan, online pawn shops typically require nothing more than a high-value asset (see What Can You Pawn? section below). Loan values are based on the collateral put forth. The items do not need to be new or like new; “worth” is quoted by expert valuators.

Once the loan amount and terms are accepted by the borrower, he or she makes monthly payments with interest on the loan, and most sites offer the option to pay the loan off early or extend the terms of the agreement. Once the loan is paid, the collateral item is returned to the owner.  If you don’t pay, your item is sold at auction.

How Much Can You Borrow (and How Much Interest Do You Pay?)

Aitken says the average loan value to small-business owners and self-employed customers at Borro has increased from about $25,000 to $35,000 since early 2012; the average loan term is three to four months. The minimum loan value at Borro, which targets a high end clientele, begins at $1,000, and goes all the way up to $1 million — but loan amounts vary by provider. Interest rates at borrow vary based on the asset and loan amount, but range from 2.99 percent to 3.99 percent per month. There is also a 5 percent to 7 percent setup fee to cover the cost of appraisal and other logistics; the fee is reduced for subsequent loans.

Smaller loan amounts are available at other leading online pawn shop sites, such as iPawn, Pawngo, and UltraPawn, which offer loans for as little as $250. According to UltraPawn CEO George Souri, the higher the value of the item pawned, the lower your interest rate. At UltraPawn, for example, interest rates may be as low as 2 percent or as high as 16 percent.

What Can You Pawn?

Sites vary in what they’ll accept as a pawned item, so it pays to shop around. Borro prefers big-ticket items like luxury cars, fine art, and antiques. Sites like iPawn, UltraPawn, and Pawngo accept jewelry, watches, collectibles, and sometimes electronics. (UltraPawn will even take designer purses, industrial equipment, and brand-name musical instruments.) Less-common items are accepted, too; for example, Borro vaults have housed a train set (valued at $64,000), and an 18th-century dictionary (valued at $230).

“Many people are realizing that they have some very interesting and valuable personal assets sitting in their homes or in storage that could be put to  good use,” Aitken says.

How Long Does It Take?

The borrowing process varies by site, but all of the lenders mentioned here allow you to obtain a quote online. The also provide free shipping and insurance on the item pawned (for the duration it is stored with the lender). Some sites, including iPawn, promise a quote in an hour.

After the loan terms are accepted, some lenders wire funds directly to your bank account within 24 hours. Souri says UltraPawn offers customized lending specifically for small businesses. As part of the application process, small-business owners are matched with a service professional who works with the applicant to understand the intent of the loan and the nature of the collateral.

UltraPawn designs each business loan to suit the borrower’s unique needs and provides several credit options. “In addition to traditional pawn loans, UltraPawn offers secured hard-asset loans, purchases with repurchase options, and uncollateralized loans through our partners. The whole process can take as little as one day,” Souri says.

About Stephanie Taylor Christensen

Stephanie Taylor Christensen holds a master’s degree in marketing and has 13 years of marketing management experience for Fortune 500 companies and small businesses. She is a regular contributor to sites like ForbesWoman, Real Simple, Mint, Minyanville, and SheKnows, and writes for several private business clients. Her work is frequently syndicated and sourced by Yahoo! Finance, SFGate,, and The New York Times. She is also a small business owner, having founded, and Om for Mom Prenatal Yoga in Columbus, Ohio. Connect with her on Twitter @WellnessOnLess.
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I have never heard of a pawn shop online before but why not.  People use the internet for everything these days.  I would love to look at one online and see what treasures I could find.


Amazing blog, the way you explained about pawn shop is really appreciable. Whenever i need to shop i always prefer, Hilltop pawn shop. They are one of the best Pawn service provider in Virginia Beach area. Last month i purchased a diamond ring from there.


Actually its pretty safe.  This one @pawnbahn ships through FedEx priority overnight and its insured by parcel pro.  They even store your assets in a bank vault in a Wells Fargo bank building 


All through the mail?  Kindof scary.