Pawn Financing In Short Supply Hidden Worries Behind The Booming Business

On March 18, the Central Bank announced that it would raise the RMB deposit reserve ratio by 0.5 percentage point to 15.5%. Since this year, liquidity recovery policies have emerged frequently, and banks have tightened their credit pockets. Boss Wang, a toy dealer in Yiwu, Zhejiang, urgently needed a cash flow. When he failed to find a bank to borrow money, he turned to the pawnshop for help. Unexpectedly, several pawnshops came down, and the other party replied that they had no money to borrow. Since the end of last year and the beginning of this year, many pawnshops in Zhejiang have entered a good period of "market", and the supply of pawn financing has exceeded the demand. Whether the hot demand brings "pie" or "trap" to the pawnshop is of great concern to the people concerned. Never been so popular in this industry Company A (the name is hidden at the request of the company) is a private enterprise mainly engaged in engineering ship manufacturing. In the middle of December 2007, because the bank loan was due and urgently needed to raise 8.5 million yuan of working capital, the enterprise found Hangzhou Hengfeng Pawn Co., Ltd. to borrow money, and the answer was, "We have no loan limit". Company B recently found another large pawnshop in Hangzhou, Zhejiang Xiangyi Jinlian Co., Ltd., to borrow money, but was also rejected. In November last year, Company B applied for a loan of 30 million yuan from a commercial bank in Jinhua City and was approved. However, due to the shortage of funds in the bank, the loan has not been obtained. The head of the company had to find a pawnshop for short-term financing. But now it seems that the possibility of success is also very small. "At present, all pawnshops are basically full of quota, that is to say, there is no money to borrow." Wang Liming, general manager of Hangzhou Hengfeng Pawn Co., Ltd. and chairman of Zhejiang Pawn Industry Association, told reporters that since November last year, with various monetary tightening policies gradually in place, the market funds are obviously strained, The supply of funds in the pawnbroking industry soon fell short of demand. "Within 10 days of the newly opened pawnshops in December, all the funds were lent out." According to relevant regulations, the "limit" that pawnshops can do is to "enlarge" the registered capital by a ratio of 1 to 1, that is, the registered capital of 10 million yuan can do lending business of 20 million yuan. At present, there are 185 pawnshops in Zhejiang Province, with a total registered capital of 2.7 billion yuan, so the scale of financing in the whole industry is more than 5 billion yuan, which is obviously not a "generous" number for enterprises in urgent need of funds. "It seems that our industry has never been so popular," said a pawnbroker. There are hidden worries behind the good market Although the current "market" is very good, some pawnshops have realized that the more customers they come to, the greater the risk of lending. Zheng Wenbing, CEO of Zhejiang Zhongcai Pawn, said that now there are many clients coming to seek funds, including enterprises of all sizes and industries. There are foreign trade enterprises and production enterprises that have received orders to deliver goods, but they cannot get loans from banks. "From the information fed back by enterprises, this round of monetary tightening is indeed not small." Generally speaking, if enterprises need short-term funds, pawn financing can really play the role of "timely help". At present, the charging limit of the pawnshop is "comprehensive service fee+bank interest rate", and the average rate is about 3% of the monthly interest rate. Wang Liming said that the time limit for enterprises to seek pawn financing is usually only one or two weeks, up to one month. Now many enterprises have "continued pawning" the funds borrowed from pawnshops to two or three months because they cannot find other sources of borrowing. "The long-term use of pawn funds is not good. The monthly interest rate of 3% is equivalent to the annual interest rate of 36%. How can an industrial enterprise have such a high rate of return?" Zhang Xiaofeng, a senior personage in the industry, said, just like an enterprise was looking for water to quench its thirst, but now it is likely to drink a cup of "salt brine". Zhang Xiaofeng said that once the financial crisis of the enterprise appears, it will inevitably affect the pawnshop. In this case, who dares to say that the "market" in front of us is "pie"? Advocate to help the needy and overcome difficulties together Last month, Zhejiang Pawnbroking Industry Association issued a special document requiring pawnshops to regulate their own behavior and do a good job in financing services. "Now, when some pawnshops see a good market, they want to expand their financing business through social lending in violation of regulations." Wang Liming said, "We require pawnshops to resist the temptation and not engage in illegal operations." Wang Liming said that as a financing institution mainly engaged in short-term loan issuance, pawnshops have always advocated the spirit of "helping the needy", and now especially advocate "overcoming difficulties together" with customer enterprises. First, it is absolutely not allowed to take advantage of the opportunity to increase prices and charge additional service fees; Second, we will do our best to provide good services and help more high-quality enterprises overcome the difficulties ahead. Another alarming phenomenon is that due to the strong demand for financing in society, various forms of illegal pawn are becoming increasingly popular, and more and more institutions are providing pawn services under the banner of "consignment banks", "financing consultants", guarantee companies, etc. Some "consignment banks" or second-hand car trading markets engaged in illegal pawnbroking in Cixi, Zhejiang and other places have a maximum monthly interest rate of 15%, which has caused huge pressure on fund borrowers. "'Usury' does great harm to the order of economic and financial operations." Wang Liming and others proposed that Zhejiang, as a major market province, has a large number of enterprises and a large group affected by changes in macro policies. Relevant parties should, while implementing the policy of monetary tightening, timely assess the situation of capital shortage in the market and formulate risk countermeasures in advance. Zhang Xiaofeng said that for pawnshops, there is an urgent need to improve their diversified business capabilities, such as turning the refurbishment of "Jue Dang" (that is, no redemption after expiration) items into an emerging industry, optimizing the profit structure and improving their ability to resist risks.