The implications of the great bank crash of 2008 still reverberate around the world – while some longstanding financial institutions crumbled to the ground, others clung on for dear life. The domino effect, that had started in the financial sector, tore through industry and commerce changing business practices for ever.
While large corporations began to shed employees to survive, the prospects for traditionally-styled careers narrowed significantly. The driving force behind business found its fuel in the entrepreneur sector, as the financial crash met the blossoming of the digital age and gave rise to the business world as we know it today.
The banks are still piecing themselves together, mired in ever-increasing regulation and closely monitored by the Financial Standards Authority. At odds with the speed and agility that’s required in today’s business place, banks are simply too slow and too unreliable.
Entrepreneurs and small business owners are discovering that the financial solution that works best for them can be found in luxury asset lending. Luxury asset lenders, including central London pawnbrokers Hopkins & Jones, are seeing a 10% growth in business lending, year on year.
Kris Parish, Director of Hopkins & Jones said, “As luxury asset lenders, we are well-versed in what the business borrower is looking for. They want to release funds quickly and in a safe and secure way that has clearly defined parameters. When borrowers come to us, we are able to sit down with them and talk them through the options available to them and explain the process of the loan. We build a relationship with our borrowers – akin to the traditional bank manager relationship – where we can get to know them, become familiar with their assets and secure the loan that they need in the timeframe that they need it”.
Rather than approach banks or building societies for loans, savvy entrepreneurs are increasingly turning to luxury asset lenders to avoid bureaucracy and meet tight deadlines. Unlike traditional financial lending, luxury asset lending works by securing a loan against one set item, such as a classic timepiece like a Breitling, Rolex or Cartier watch.
With such watches securing loans of many thousands, the borrower is able to ringfence the risk in order to secure funding. The luxury asset lending process is overseen by the Financial Conduct Authority, which ensures that both the borrower and lender are protected appropriately.
The lender must make an appropriate and transparent valuation of the item – for example, a Patek Philippe Nautilus watch – and it’s key that the lender is accurate. If the loan cannot be repaid and the pawnbroker does have to sell the piece, the borrower is also protected -as much as they can be, in this circumstance. When the piece is sold by the lender, the lender takes back the price of the loan, the interest and the sale fee. Any excess profit that is left over after this point is paid back to the borrower, with the lender under obligation to demonstrate that they sold at a fair price.
A far cry from the closed doors of the traditional banking world.