When obtaining a business loan for a pawn shop or related pawn brokering business, it is imperative that you have a properly structured business plan that will assist you in showcasing how you intend to operate your pawn shop, how the business will operate, how you intend to market the business, the anticipated financial results of your company, and how you intend to repay your debt obligations. This sample loan business plan will provide you with the framework that you need in order to acquire a business loan for starting or expanding this type of business.
When obtaining a business loan for a pawn shop, it is imperative that your business plan has a clear and concise executive summary that provides an outline of what are seeking to accomplish, how much capital you are seeking to raise, the management biography of the business owner, and an overview of the anticipated profit and loss statements of the business. Here is an example of how the title paragraph should be written:
Pawn Shop, Inc. (“the Company”) is seeking a business loan of $100,000 in order to launch the operations of a pawn brokering business that will be based in San Francisco California. The Company was founded in (Insert Year). The business was founded by Mr. John Doe.
In the next segment of the business loan and business planning document, you should showcase the products and services that you will be providing to the general public. For instance:
The Pawn Shop will provide general pawn brokering services to the general public, which includes providing small collateral loans to individuals based on the value of the property that they bring into the Company’s store. The business will specialize in making loans that are specific to jewelry.
Now it is time to discuss the anticipated terms of the business plan that you are seeking. An example paragraph of how this is stated:
At this time, Mr. Doe is seeking a conventional business loan in the amount of $100,000. The interest rate, loan terms, and loan covenants are to be determined during negotiation. However, this business plan assumes that the business will receive a seven year business loan with a seven percent interest rate due on the outstanding principal balance.
Now that the summary of the business has been provided, it is time to provide a brief overview of the owner of the business. An example paragraph summing up the owner is as follows:
Mr. Doe is a highly experienced business person that has years of experience regarding the direct ownership and management of business. He will be able to effectively bring the operations of the Pawn Shop to profitability while ensuring that the business loan’s payments and its covenants are met at all times.
The most important thing to your lender when applying for a business loan is how you intend to repay the bank. In this section of the business plan, you should provide an overview of the finance’s of the business discussing the anticipated revenues, expenses, and profits/losses. You can also discuss the applicable collateral within the business plan that will be used to secure your business financing.
One of the most important aspects of your business plan is how you intend to expand the business over a three to five year period. Banks and finance companies always want to see that the business will experience a moderate to strong level of growth. This is especially true in business lending because as your business grows the cash flow that secures your business loan will decrease proportionality against your monthly credit obligations. An example of how this is stated is as follows:
The Pawn Shop will continue to expand through organic means including increasing the Company’s advertising budget via the reinvestment into the after tax cash flows of the business. Additionally, if the business is highly successful then the Company may seek to establish additional locations after the third year of operations.
In this section of the business plan you should focus on how the proceeds of the business loan will be used. An example of this would be as follows:
Pawn Shop Store Establishment – $50,000
Inventory – $10,000
Working capital – $40,000
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In this section of the business plan you should discuss the percentage ownership of the business among the owners of the business. For example:
Mr. Doe will own 100% of the pawn shop.
When applying for business financing, the bank will also want to know who serves as the board of directors. For small businesses, usually the owner serves as the director of the business. An example of how this is worded:
Mr. Doe will be the sole director of Pawn Shop, Inc.
Any bank or financing company is also going to want to know what you intend to do with the business over a set period of time. Many business owners will develop and expand a business with the intent to sell the company to a third party at a later time. When drafting this part of the business plan you should focus on what you intentions are in regards to potentially selling the business. This is often worded as:
Mr. Doe would most likely sell the Pawn Shop to a third party for a significant earnings multiple. Pawn Shops usually sell for approximately one to three times earnings given the financial strength of the business. In this event, the business would be sold by a business broker and the business loan sought in this plan would be repaid according to the covenants of the business loan agreement.
When developing a business plan that is appropriate for obtaining a business loan or other business credit facility you need to clearly showcase the services or products that you will be offering to the general public. An example of how this section is worded goes as follows:
The Pawn Shop will specialize in making small collateral loans to individuals that will last two weeks. On each item brought in by the customer, the Company will grant a loan equal to 10% to 20% of the saleable value of the item. The customer, should they return to receive their item back, will be required to pay back the loan amount plus a fee equal to 20% of the loan amount. On every item accepted for pawn brokering by the Company, the business will follow all applicable state laws regarding the acceptance and handling of merchandise. Additionally, the business will generate secondary revenues among people that do not return for their merchandise. In this event, the Pawn Shop will resell the item to the general public or to a used goods wholesaler.
It is important to let your financial institution know that you are well apprised of the financial situation of the general economy when you are applying for a business loan. This is especially true in today’s environment where lending has become more difficult and will remain more difficult in the foreseeable future. Specifically, you should gear this section of the business plan analysis towards the industry that you are operating within. For example:
The current economy has remained difficult over the past few years. However, Pawn Shops typically operate with a strong state of economy stability as these lenders are often used as a last resort among borrowers that are in need of quick loans or do not have the ability to sell the merchandise that they can use as collateral. As such, the business should be able to remain profitable and cash flow positive in any economic environment.
In addition to providing your business loan officer with an understanding of the general economy, it is important that you showcase that you have an equal understanding of the industry in which you are operating within. As such, you will need to provide you business loan institution of a brief overview of your industry and any potential changes that may affect the way that your company does business. An example of how an industry overview is as follows:
The Pawn Shop industry, despite the current economy climate, has remained strong despite the fact the general economy has suffered. Within the United States, there are 20,000 businesses that operate in a pawn brokering capacity. On a yearly basis, these businesses generate revenues of $6 billion and provide jobs to more than 100,000 people. The total payrolls paid by the pawn shop industry has exceeded $1.4 billion on an annualized basis over the past five years.
At this time, there is currently no pending legislation or changes to the economy that are expected to change the nature of how the Pawn Shop Industry conducts business.
In this section of the business loan application and business plan analysis, you should focus on the demographics of your localized market (or national market if applicable). This section should discuss how many people live in your area, the anticipated number of people that would require the use of pawn shops, the median household income of people living in the area, poverty line statistics, and any applicable laws that would apply to your operation of a pawn shop.
Many people that are developing new businesses or expanding existing businesses often feel that their business does not have any competition or limited competition at best. However, this is almost never the case. Unless you have re-invented the wheel – you will have competition. When applying for a business loan, you should clearly showcase your competition in your business plan. This is especially important to your banker as they will be able to gauge your ability to be successful in your targeted market. Many business loan underwriters will aggressively confirm that competitive nature of your local market and your local industry.
When drafting this section of the plan you should heavily discuss the competitive advantages that you intend to have over your competition.
In addition to all of the above information that we have covered, your business loan officer is also going to want to know how you intend to market your business to the general public. Most people do not quite understand how to effectively market their business outside of prominent signage or flyer distribution. When applying for a business loan (again in this difficult lending climate), your banker is going to want to see that you have a clear methodology of how you intend to market your services or products to the general public. In this section of the business plan – we will overview how to showcase your services/products to the general public.
The Pawn Shop will place prominent signage on the facility to draw a significant amount of foot traffic.
The business will maintain listings in the Yellow Books.
The Pawn Shop will also maintain an internet website that showcases the Company’s operations, hours of operation, and relevant contact information.
Additionally, you will be required to further drill down (in your business plan) how you intend to implement your strategies when you launch or expand your business’s operations. In this section of the business loan and business plan documents, you should amplify the bullet points from the section above. For instance:
The Pawn Shop intends to use a number of strategies that will create instant traffic and customer flow to the Company’s location. These strategies include not only using prominent facility and road signage, but also distributing flyers to people that fall intot he Company’s targeted demographics. The business will also regularly take out advertisements in localized newspapers that showcase the Company’s hours of operations, pawn shop and pawn brokering services, and specials that are occurring within the store on a regular basis.
The business will also maintain a highly informative website that showcases the Pawn Shop’s services, its hours of operation, collateral and lending information, licensure information, and other relevant information in regards to the Company’s services. This website will be listed on major search engines such as Google as many people now use the internet to locate local businesses.
Beyond any other part of your business loan application or business plan, the financials section of these documents are what matters most when applying for a business loan or any other type of credit facility. Ultimately, this section of the business plan showcases not only what your anticipated profitability will be, but also how you intend to repay the funds that you have borrowed through your business financing facility. An example of how this section is structure is as follows:
Pawn Shop, Inc. will have an average annual growth rate of 10% per year.
Mr. Doe will acquire $100,000 through a business loan in order to launch the operations of the business.
Now it is time to showcase how you intend to repay your loan, generate a profit, and increase the book value of your business over a three to five year period. BusinessPlansForLoan.com has developed an easy to use financial model that you can use when drafting out the financial model for your business plan and business loan application. Through your business loan application, you will be required to have the following:
Profit and Loss Statement for your Pawn Shop
Cash Flow Analysis for the Pawn Shop
Balance Sheet for the Pawn Shop
Business Loan Amortization Tables
Watch the video related to business plan
Your business plan is very often the first impression potential investors get about your venture. But even if you have a great product, team, and customers, it could also be the last impression the investor gets if you make any of these avoidable mistakes. Go to www.phoenixwestern.com to access the information you need to know before you communicate with the potential capital provider.
Go Jay!
These tips are a big help.
Sounds quite easy compared to a 3 year Business diploma, which is what I'm in.
Unless you are prepared to support yourself financially, you are going to have to listen to your father. My suggestion is, for now, listen to him. There is no harm in earning an MBA in business, if you want to start your own publishing company, you're going to have to know that any way. While you're studying business, take some electives in writing and see how well you do. You can still follow your dreams, just one step at a time. If all else fails, you will have the financial background and networking to still make something of your life. I understand feeling controlled by your parents, but at this point, you really don't have a choice. Like the saying goes "who ever has the gold makes the rules", and right now, your father is in charge. It is not like he's telling you to do something awful, he has your best interest in mind. You can always be a writer, there is no time limit or shelf life on being able to do so. Who knows, you may be able to use your own experiences to write a book!
Also, doesn’t business grants and sba’s require a business plan
@drgigglesdoescocaine Amen.
Please.. Too much ads.
There is so much wrong with it.
First of all many sentences are too wordy. Many are also run-on sentences. You spelled some stuff wrong "weather" is most prevalent it's spelled "whether". Also you need to spell out "2nd" as second and "3rd" as third, capatalize your "i's" and another thing that sticks out bad is "Reduce in my class" should be changed to something like "My class had become significantly smaller between junior and senior year because of many students moving or leaving our school.".
oh and "4" should be spelled out as well as "9th".
I would recommend you take this to your english teacher and ask her to help you with the wordiness and run-on sentences.
man i hate schoo
Employers do not have a lot of time going over cover letters. Naturally, to explain how you will meet the criteria required for the position being offered you will have do some research, so you actually KNOW instead of GUESS what those job elements are. This can be found on the Internet, or by asking someone that works in a similar position what sort of problems they are expected to solve on the job. Knowing exactly what the Hiring Manager is looking for and tailoring your letter to highlight that aspect of yourself makes you stand out like a beam of light in a dark stormy night to the average Hiring Manager.
You will also have to clearly lay out the link between those needs and your own experience solving similar problems in previous jobs. It's better to be too clear than to assume the hiring manager will make the connection on his or her own. Remember, you are writing one good cover letter and spending a large amount of time on it until it's a polished gem is smart work. By contrast, the Hiring Manager is reading dozens if not hundred of letters, and spending a couple of minutes or even a few seconds on each one.
Your theme is OK. You have several major errors in punctuation, grammar, diction, vocabulary and style.
Perhaps your English teacher could help you correct them. (I no longer consider such correction to be a proper task of answerers on the University+ Y!A board.)
Best wishes.
Do your own homework. Seriously, if you actually have the time to post all of this then surely you can take the time to study and do well in school. I am afraid our schools will be churning out lame-brained bozos who always have to ask other people for answers.
Dude, seriously.
You will find a suitable school in America regardless of your GPA. Try going to collegeprowler.com and browsing. As for your interest, business is a great degree that offers plenty of job choices, and you can always pursue music as a hobby on the side.
what does this have to do with insurance?
3:16 end of ad.
great points we as Americans should really pay for a spot on the major news networks and have this read nation wide…
but then we would probably end as the same fate as JFK or simply put out as conspiracy theorist
@Qjemuse Without the ads there would be no show. Chill. I think everyone can deal with 30 seconds of an ad if that means we keep getting more episodes.