Pawnbrokers see surge in business loans from SA entrepreneurs

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Charles Meyerowitz, CEO of Lamna Financial, commented on this trend, stating, “Entrepreneurs are often faced with limited access to traditional financing options, especially in the current economic climate. This has led to a growing number of business owners turning to pawnbrokers as a viable alternative for securing quick and flexible funding.”

He continues: “By leveraging high-value assets such as trucks, vehicles, luxury watches, fine art, and high-end vehicles, to obtain the capital needed to sustain or grow their businesses. Most of our clients are entrepreneurs and often require funding quickly to operate at the level they need to.”

What this means, he explains, is that often, an entrepreneur is working on projects or contracts worth millions of rands but during the interim period while the projects are being realised, they are required to pay out costs to see these projects come to fruition.

“Pawnbroking provides these types of business owners with short-term solutions to fund these projects,” he said.

According to the World Bank, SMEs represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.

A growing need for alternative financing

South Africa’s entrepreneurial ecosystem, while vibrant, continues to grapple with significant barriers to accessing traditional forms of finance.

According to recent reports, many SMEs struggle to meet the stringent criteria set by banks and other financial institutions, leading to a gap in available funding. This situation has been exacerbated by the economic fallout, which has made securing loans even more challenging.

“Entrepreneurs and small business owners need agility in today’s market,” Meyerowitz continued.

“Traditional lending processes are often slow and cumbersome, which doesn’t align with the fast-paced nature of running a business. Pawnbroking offers an efficient solution—business owners can access funds within hours, using assets they already own.”

“It's no surprise to learn that 35% of all loans made to SMMEs are in the form of personal loans or asset-backed loans, as these entrepreneurs find it too difficult to access funding as a business,” Meyerowitz explained.