Bank lending rates are at their lowest since the Great Depression, according to Standard & Poor’s, a leading financial services firm. This leaves consumers turning more and more to pawn shops to meet their credit needs.
It is extremely difficult in the current economic environment to get small business loans and personal loans from large banks. As a result, banks are contributing little to the slow economic recovery, a top S&P official said.
Federal Reserve Chairman Ben Bernanke said this week that this environment of tight credit might be “muting” the impact of actions the Fed has taken to stimulate the economy. This means the Fed feels that its hands are basically tied and it has been unable to significantly jumpstart the economy. A “still depressed housing market, tight credit for some borrowers and fiscal restraint at federal, state and local levels” is also responsible for the drawn out poor recovery, Bernanke said.
That leaves community banks and small lenders, such as pawn shops, to make up the difference.
Pawn shops are equal-opportunity lenders, providing collateral loans to those who are seeking stopgap financial measures. This includes small business owners that are struggling to meet payroll and families that are living paycheck-to-paycheck. As business owners use the funds from collateral loans to meet payroll, they can hire more personnel. And hiring by private businesses is the biggest driver of economic growth.
Approximately 25 million Americans do not have a bank checking account. Collateral loans are also helpful to this segment of the population.
The advantages of microcredit in an era of tight credit are many. Collateral loans help bridge financial gaps, spur small business growth, and do not impact consumers’ credit.
Pawn shops provide an important financing alternative in a depressed economic environment. Come in to find out about collateral loans offered by Suffolk Jewelers & Pawnbrokers today.