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Borro Reinventing Pawnbroking In The UK

by Jim ONeil on August 4, 2011

in personal loans

UK banks are falling short in terms of individual and small business lending. This leads these parties to look for other sources of capital. Borro is one company designed to meet their needs by offering pawnbroking services.

In any given week, the company provides loans against yachts, classic cars, and even paintings from artists as famous as Andy Warhol and Picasso.

Whether the money is needed to pay for a divorce or enable business growth, Borro will provide it. As long as something of comparable value is offered in exchange, that is. The company launched in 2008, around the time the UK was fully immersed in the still ongoing recession.

The timing led many to conclude that the business is taking advantage of consumers who fell victim to the economy.

Borro differs from non-bank lending provided by Ferratum and Wonga because its lending is backed by assets. Loans bank provided are difficult to come by and Borro has found a niche in the resulting gap left by the financial institutions.

Pawnbroking has grown from back alley deals into a mainstream market, with the average Borro loan being about 2,500 pounds.

CEO Paul Aitken claims that only about ten to 12 percent of Borro customers default. Small business owners in need of fast liquidity are the typical customer base. Some are repeat customers, with one business owner taking out a loan every September and repaying it the following January.

In June alone, Borro issued over two million pounds in loans.

Private wealth managers and independent financial advisors are taking notice and referring their clients. Loans are taken out on rare cars and pricey watches to finance new investments. Though some customers still use pawnbrokers as lenders of last resort, Mr. Aitken said that a majority of Borro customers are not desperate. After all, how many desperate people own Rolexes?

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