Small business owners pawn belongings to pay wages

Small business owners are pawning personal belongings such as watches to pay wages and to buy stock as banks tighten their access to short-term credit, according to the boss of Britain’s biggest pawnbrokers.
Chris Gillespie, the chief executive of H&T, said there had been an increase small business owners pledging valuable items to secure working capital and that the trend was expected to continue. “It’s clear they find it difficult, at times, to access credit,” he said. “Any small business with a working capital need has restricted access to bank funding.”
While these business owners represent only about 1 per cent of H&T’s customer base, they account for the majority of loans of £5,000 or more. The trend contributed to a 12.5 per cent rise in H&T’s pre-tax profit, which reached £9.9 million in the six months to the end of June, also benefiting from increased demand for foreign currency and stronger gold prices.
H&T, which has 280 shops nationally, said strong demand for pawnbroking was partly because of wider economic conditions, as well as a shortage of regulated small-sum, short-term credit.
“VAT is paid quarterly, so if your working capital is fully deployed, this is a way of covering the additional working capital needed,” Gillespie, 61, said. “It would be shopkeepers buying stock and builders needing to buy materials or pay wages until they get paid themselves.”
H&T does not lend against business assets, so most small business loans are secured by gold or jewellery as collateral.
Customers taking on an H&T loan pay an annual interest rate of 165.5 per cent and, if the loan is not repaid, the pawned item is sold to pay the debt. The company said loans typically were being paid back more quickly than in the past, at 94 days in the first half of this year, from 97 days a year earlier.
The Federation of Small Businesses has filed a complaint to the Financial Conduct Authority claiming that lenders often require personal guarantees, putting their homes on the line, which has discouraged businesses from applying. Martin McTague, the group’s chairman, said: “Small firms have been telling us for some time that it is hard for them to access affordable finance, an issue that is a significant barrier to growth.”
H&T Group was founded in London in 1897 as Harvey & Thompson and was floated on Ai, the junior stock market, in 2006. Its shares, which climbed to a peak above 480p at the height of the cost of living crunch in late 2022, fell by 28p, or 6.7 per cent, to close at 390p.