Pawnshops draw small firms
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TUNGTHANASIN CO, the operator of Easy Money pawnshops, sees more people pawning their treasured possessions, especially those running small businesses, as they need cash to support expansion ahead of the expected economic recovery.
Managing director Siththreewit Thangtharnarkeat said yesterday that the company’s small-business customers had climbed to 70 per cent of total loans of Bt4 billion granted by Easy Money shops in the first eight months of this year.
Banks have also tightened cre-|dit to small businesses during the economic uncertainty, causing them to shift to pawnshops, he said.
Pawnshops are one source of funds for retailers and small businesses. There are several reasons customers take their personal belongings to pawnshops.
In general, individuals go to pawnshops when they lack money, but small-business owners use them to boost liquidity, and they will redeem their valuables when their sales bring in enough revenue.
The company charges customers 15 per cent per year, payable every five months.
Tungthanasin plans to expand, focusing on upcountry markets and border provinces to tap small businesses that are planning to expand.
It recently borrowed Bt750 million from Siam Commercial Bank, bringing its total debt with SCB to Bt3 billion to use for expansion.
The Easy Money chain runs to 29 shops. Each outlet requires a separate licence.
It might acquire existing pawnshops as another way to expand.
Gold price stable
Easy Money takes in assets worth Bt1 billion per month, but next year goods left at its shops are expected to increase to Bt2 billion a month in line with the economic recovery.
The company has to have sufficient capital to support more outlets.
However, the falling price of gold has caused a slowdown in growth at pawnshops, including Easy Money, whose business this year is expected to rise by 40 per cent versus annual growth of 50 per cent in the past.
The gold price this year is more stable than last year. It could dip below US$1,200 per ounce, but should quickly rebound to stay at $1,200, Siththreewit said.
Kannikar Chalitaporn, president of SCB, said the bank would focus more on small and medium-sized enterprises next year because they will quickly resume their activities when the economic outlook turns bright.
Hopes for a better economy and the government’s plans to invest in transport infrastructure have reassured businesses, especially those related to the construction industry. SMEs in this industry are among the priorities of SCB next year.
The bank is preparing its 2015 business plan, including the loan-growth target. However, next year should be better than this year, as the bank has been focusing more on controlling costs to shore up its bottom line rather than pumping up its loan portfolio.
The expenses-to-income ratio is stable enough to deal with business next year, so the strategy for 2015 will be changed. This means SCB will resume its focus on lending, but growth will be in line with the industry at 6-9 per cent, assuming growth of gross domestic product at 4-5 per cent.
