The pawnshop industry is thriving.
Pawnshops fill a need that banks can't. They are popular because there are no loan application forms to fill in nor is there any waiting before you get your cash.
Pawnbrokers offer high interest short-term credit. The loan is dependent on the value of the pledged item.
A client brings an item to be used as collateral for a loan. The pawnbroker assesses its value and proposes a loan amount. It is vital for a pawnbroker to be accurate in testing the authenticity and value of precious metals and gems.
If the client is satisfied with the amount offered, the deal is done.
The pawnbroker issues a ticket with information about the item's description, money loaned and date when the money must be paid back.
When the money is paid back the pledged item is returned, but if not, the pawnbroker keeps it.
You cannot operate a pawnshop business without a licence. You must submit an application form to the relevant department. There are fees to be paid for this.
You must also submit supporting documents to verify your financial standing and character.
The documents include a comprehensive financial statement verified and prepared by a certified accountant, your net worth and liquid assets, a credit report and written proof that you have garnered the required minimum number of years of finance-related experience.
A clear criminal record report from the police and reference letters from financial institutions are also required.
After you have fulfilled all the above, you will get a pawnshop licence.