@CNNMoney June 1, 2012: 8:13 AM ET
NEW YORK (CNNMoney) — Artwork by Andy Warhol, military medals, helicopters, and a Babe Ruth baseball bat aren’t the typical pawnshop fare. But all of these valuables have been used to secure loans through a personal asset company called Borro.
At a time when small business bank loans can be hard to get, more entrepreneurs are looking for alternative ways to finance their businesses. Borro is trying to tap into that niche, offering short-term loans between $1,000 and $1 million to small businesses and other clients who provide collateral such as fine art, watches, jewelry and even private jets and yachts.
Paul Aitken, founder and CEO of Borro, came up with the idea for the firm after Lehman Brothers collapsed in 2008.
“I felt there was an opportunity to provide a business that bridges the gap between the very high end types of lending that private banks do and the very high end of retail pawnbroking,” he said.
Borro doesn’t have a retail presence, though, and it offers much bigger loans than a traditional pawnbroker, so “we don’t actually call ourselves a pawn shop,” said Aitken.
Indeed, loans average about $17,000 at Borro vs. $150 at a traditional pawnshop, according to data from the company and the National Pawnbrokers Association. Depending on the item, a customer can borrow between 50% and 70% of its resale value at an interest rate ranging from 2.49% to 3.99% per month.
Originally launched in the UK, Borro made its way stateside in January. Clients include small business owners who need cash to invest in new technology or finance a growing business, as well as private individuals garnered through referrals from private banks and financial advisors.
First Published: June 1, 2012: 7:17 AM ET on money.cnn.com