Entrepreneurs turn to pawn to keep firms afloat
H&T profits rise as clients borrow more
StrUggLINg business owners are increasingly pawning their personal belongings such as gold or jewellery to top up the cash they need to keep trading.
the trend was revealed in a update from pawnbroker h&t, which has seen profits rise as consumers are also forced to trade in valuable belongings to make ends meet.
a spokesman said: ‘We are continuing to see a number of requests for larger value loans, often from customers who are business owners seeking to fund working capital by pledging personal assets.’
the firm on average gives out loans of £479 but is in some cases lending sums of £5,000 or more which ‘are generally used for business purposes’.
these represent 18pc of the value of h&t’s ‘pledge book’ of loans to customers, but just 1pc of loans by volume.
Items typically pawned include gold, jewellery, watches and handbags. h&t does not lend against business assets or consumer goods that tend to depreciate in value.
It comes as separate figures show an increase in the numbers of companies and individuals going bust.
Company insolvencies totalled 2,191 in July, 16pc more than the same month last year, according to the Insolvency Service. It said the insolvency rate had risen to 56.6 per 10,000 companies.
that is up from the lows seen in 2020 and 2021 but about half the rate seen during the 2008-9 recession.
and 10,524 individuals entered insolvency, 24pc higher than in July 2023. h&t said pawnbroking volumes in the first half of this year were up 10pc year on year as people struggled for cash and found it harder to get loans elsewhere.
h&t reported a profit of £9.9m for the six months to the end of June, 12.5pc up on the same period a year ago. that was largely driven by a rise in the value of pawnbroking of 14pc to £146m.
Borrowers pay an annual rate of 165.5pc on the loan. If it is not repaid their pawned item is sold to meet the debt.
h&t, which has 280 shops across the UK, also benefited from growth in its foreign currency business and improved margins in its gold buying and selling operations.
Shares, however, slumped by 6.7pc, or 28p, to 390p.