7 Ways to Use a Loan for Your Pawn Shop
When pursuing a pawnshop loan, it’s important evaluate your credit score, typical amounts in your bank account, and the loan’s interest rate. All these factors will affect how you use the financing and if you’re able to repay the loan.
Once you ensure that your pawn shop can handle the loan repayment process, it’s time to consider how you’ll use the loan to grow your operations. To help you brainstorm, we’ll share seven ways to use a business loan to support your pawn shop.
How to Spend Your Pawn Shop Loan
1. Purchase More Inventory
The obvious way that pawn shops make money is by purchasing inventory and selling your items for a profit. Therefore, you’ll need to buy inventory to stock your shop.
Estate sales are a great place to start! You buy a large volume of jewelry, art, clothing, and home goods at estate sales for a good price. With the funds from your business loan, you can visit some estate sales and stock up on inventory that you wouldn’t be able to afford otherwise. By doing this, your customers will have plenty of options to choose from when they check out your store.
2. Insure Your Inventory
While the amount of insurance you’ll need will vary based on numerous factors, all pawn shops should have some type of insurance coverage. This will protect your shop and the products or services you offer.
When choosing a pawn shop insurance plan, you should make sure the plan covers stolen items, weather related-disasters in your geographic area, and other issues covered by insurance.
Insurance is important for any business, but especially for pawn shops in which the merchandise can be valuable, expensive, or even impossible to replace.
3. Make More Collateral Loans
As you likely know, your pawn shop can sell inventory for a profit or make short term collateral loans to customers. Due to this, a business loan can provide the funds to back up those loans which can be helpful for new business owners who may not have the cash flow to provide collateral loans yet.
4. Upgrade Computers and Software
Staying organized as a business owner is key. One way to ensure that your operations run smoothly is to implement software designed specifically for pawn shops. You can use it for everything from keeping track of inventory to securely storing customers’ contact information. Although you might think that having up-to-date computers and software is an expensive investment, having a pawn loan will make it easier to afford these upgrades.
5. Open New Locations
If your pawn shop is successful, you might want to consider opening another location. Having another location can help you serve more customers, including people in another geographic area.
To start your expansion project, you can invest in a tool like Pawn Guru to find out where other shops are located. This will help you avoid opening your new location too close to competing stores. In addition, you can also use the site’s search tool to see which geographic areas don’t have pawn shops.
Once you find a location to open your pawn shop at, you can use your business loan for renting the new space, hiring staff, and filling the shop with inventory.
6. Market Your Business
There are 9,650 pawn shops across the United States. That’s a lot of competition, so you’ll need to make sure that your shop stands out.
With funding, you can find creative ways to show customers what merchandise you have to offer. For example, you can create business cards, build an online store, and publish sponsored social media posts. As you invest in different marketing efforts, be sure to monitor which strategies are generating the most sales, so that you know how to revise your marketing budget.
7. Hire a Security Team
Any time you’re in the business of buying and selling expensive items, hiring a security guard to protect your store should be a consideration.
To keep your business safe, you might want to hire a full-time security guard to monitor the premises. If you don’t think this is necessary, you should still invest in a quality security system to protect your building.
Conclusion: Grow Your Business with a Pawn Shop Loan
Owning a pawn shop can be an exciting, profitable business venture for those who invest the necessary time and resources. A business loan can help you start a pawn shop or allow you to grow your existing operations.
Has your business used a pawn shop loan? Tell us about your experience in the comment section below!
Editor’s Note: This post was updated for accuracy and comprehensiveness in October 2019.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.