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Don’t Be a Pawn of Perception

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Alvin Bell Jr., president of Big Pawn Inc. and Freeman Jewelers Inc., wants to grow his Chicago-based businesses further, but licensing and public-relations obstacles stand in his way.

Alvin Bell Jr., president of Big Pawn Inc. and Freeman Jewelers Inc., wants to grow his Chicago-based businesses further, but licensing and public-relations obstacles stand in his way.

Bell opened the businesses in 1976 when his 17-year career as a jeweler delivered dismal profits. Big Pawn offers loans on the collateral of any type of merchandise, while Freeman Jewelers specializes in new and pawned jewelry.

Bell sells unclaimed pawned merchandise, reaping revenues of approximately $2 million annually; another $600,000 is earned from the interest charged on the loans once customers reclaim their merchandise. Despite the healthy revenues, a plan for growth and Bell’s more than 25 years of experience as a business owner, banks have grown increasingly reluctant to support him. Here he explains:

Our problem is one of perception, and it’s very difficult to manage. As a pawnshop, our stores won’t be found within the upscale storefronts of Chicago’s Magnificent Mile. We do, however, invest in the neighborhoods surrounding our stores. Despite this, in the past few years, legislation governing the purchase of guns has put pawnshops in the news, and the perception that pawnshops increase neighborhood crime is, perhaps, even escalating.

We can assure potential lenders of our credibility through our long borrowing history, yet banks’ senior management usually thinks, "We don’t like that business," or "How truly moveable are a pawnshop’s assets?" Frankly, our real estate isn’t readily moveable, and our inventory is portable. Yet right now, we have $750,000 worth of receivables and more than $400,000 worth of inventory.

Big Pawn and Freeman Jewelers are legitimate businesses, but zoning regulations stipulating where we can locate aren’t changing fast enough to keep up with the evolution of pawn brokering: Today’s pawnshop is likely to be a well-lighted, clean shop, not the dimly lighted, seedy cavern of stereotypes.

We want to grow, and part of our strategy would be to open outlets in other areas of town or perhaps purchase stores owned by another pawnbroker. City and state licensing stipulations have prevented us from opening in more upscale areas of town — a move that might appease banks. Purchasing another pawn business hasn’t yet presented itself as a viable alternative.

One of my shops is strictly a pawnshop with a wide variety of merchandise, while two other shops retail new jewelry and sell pawned jewelry too. Do you have any suggestions on:

  1. How to convince banks to lend us money?
  2. What other ways could I acquire capital?
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