Fast Finance for Entrepreneurs from SA’s Pawnbrokers
Access to finance is a major constraint for startups and entrepreneurs in South Africa.
Increasingly, new-style, online pawnbrokers are helping fill the gap left by banks and other traditional lenders. Through rapidly supplied loans against movable assets, they are providing fast finance for entrepreneurs.
Article at a glance:
- the need for fast finance for entrepreneurs
- how banks fail entrepreneurs
- where SA’s pawnbrokers are coming in
- ways to leverage asset-based loans
- about Pawn My Car.
The need for fast finance for entrepreneurs
Everywhere in the world, entrepreneurs have to “hustle” to succeed. In countries like South Africa, where economic conditions are tough, this is doubly true.
Many entrepreneurs delve into multiple business ventures at one time. They may have more than one startup on the go. They innovate, and take measured risks on new ideas, technologies, products and services.
It’s these characteristics that make entrepreneurs important for the future of South Africa’s economy. They have the potential to drive development and to open up new doors for financial growth.
However, almost any type of business venture requires capital if it’s to survive and grow.
At minimum, it takes funding to source supplies, and develop and promote services. Money may be required to cover costs like materials, deposits, services, staff and premises.
Without fast access to funding, opportunities may be missed.
This can stifle innovation. It may also result in business stagnation or failure, and loss of competitive advantage.
How banks fail entrepreneurs
South African banks offer both business and personal loans. However, speed isn’t their priority.
Entrepreneurs may be overwhelmed by the reams of supporting documentation that banks require.
It can also be exceptionally difficult for new or startup companies to qualify for business loans.
Often, a minimum of three years’ worth of financial information is a prerequisite. A credit history must also be in place – but this may be missing for a new business.
This is a problem. In a country that desperately needs more innovation and more jobs, it doesn’t ultimately pay to stifle new businesses.
How South Africa’s modern pawnbrokers are helping
It’s understandable that banks hesitate to fund businesses that don’t yet have proven track records. This is because most loans from banks are unsecured loans.
By contrast, pawnbrokers offer loans that are secured by some form of collateral. This enables them to offer funding without assuming an impractical level of risk – and without all the delays and red tape.
The practice of using an asset of value to secure business funding is probably almost as old as trade itself.
Over the past two decades, however, pawnbroking has undergone a transformation.
|Modern pawnbrokers have left behind an historical association with dusty corner shops and joined a multi-million dollar, global industry that specialises in asset-based lending.
According to Allied Market Research, the South Africa asset-based lending market was valued at US$601.73 million in 2021. It is expected to reach a whopping value of US$2.2 billion by 2031.
Reputable pawnbrokers are properly registered financial service providers, subject to the same regulations as other credit providers.
How pawning assets can help entrepreneurs leverage opportunities
Pawning an asset can give you access to funding within as short a period as 24 hours.
If a time-sensitive business opportunity crosses your path, consider a short-term asset-based loan from a pawnbroker.
Getting funding to fulfil a purchase order or contract
In this scenario, a business has secured a much-needed new contract or purchase order, but it doesn’t have the funds to complete it.
Instead of disappointing the client and losing out on the deal, get a short-term loan from a pawnbroker to cover the upfront costs, such as materials and staff.
The loan gets repaid as soon as the client has paid the invoice, so there’s no lingering debt and heavy interest to burden your business for years to come.
Bridging a gap in cash flow while waiting for invoices to be paid
In a similar scenario, you might be waiting on one or more clients to pay an invoice that’s worth a sizeable amount of money.
The money is going to be coming in during the next month or two, but your business still needs steady cash flow for other jobs and wages.
A quick short-term loan that you know you’ll be able to repay in a month or two is a good way to bridge this gap.
Securing time-sensitive deals or investment opportunities
A lucrative deal or opportunity to invest sometimes requires a rapid response.
Pawning a vehicle is one of the fastest ways to access funding, making it possible to act quickly to exploit time-sensitive opportunities.
Accessing cash for buying equipment or expanding your business
As an entrepreneur, you never know when an opportunity for expansion will present itself. This could be an opportunity to start offering new services or invest in new machinery that’s come on the market at a good price.
Big sales on vital materials or components are also a good time to stock up but usually require a significant upfront cost.
These types of purchases usually pay for themselves within a few months, so getting short-term funding from a pawnbroker is low risk.
How entrepreneurs can pawn vehicles with Pawn My Car
With Pawn My Car, you can use a car, bakkie, delivery van or truck to secure a loan quickly and easily, with no delays or laborious paperwork.
We’re a registered financial services provider, with branches in major cities across the country. Our interest rates are competitive, and we don’t charge any hidden fees or early settlement penalties.
APR & Loan period
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.
All accounts may be renewed if they are up to date.
All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.
Non-payments may result in the matters being escalated.
Client borrows R10,000 for 90 days.
Total Cost of Loan
(Interest + Service Charge)
Total Cost of Loan
Monthly Fee (Interest + Service Charge)