Pawn shops and some jewelry stores reopened on Monday, businesses freshly considered “essential” because they provide unconventional financial services to a population often underserved by lenders.
Stores were closed last week as part of Miami-Dade County Mayor Carlos Gimenez’s general mandate to shut down non-essential businesses in a bid to slow the spread of the coronavirus. Now, pawn shops and jewelers are joining banks, grocery stores and gas stations as so-called essential companies that are still open.
With South Florida already on hold, local pawn shops described activity as light on Monday. But it could be the calm before the storm. Millions of Floridians are likely to file for unemployment in the coming weeks and the government’s stimulus efforts, as helpful as they are, appear to be taking a few weeks off.
Past downturns have forced low-income borrowers to turn to pawn shops and other forms of unconventional emergency lending, but this time it’s different – it’s a screeching halt. business activity around the world and across the economy as people are forced to stay in your home to limit the spread of the virus. In South Florida, millions of employees in the hospitality, tourism and entertainment industries will be immediately out of work.
And while unemployment insurance payments help, the bills will continue to mount. Pawn shops have traditionally provided money to some who live paycheck to paycheck, accepting something of equal value to the loan as collateral. Many also buy watches, gold and diamond rings, and precious stones.
“We are definitely serving the unserved segment of the community,” said Eduardo Jimenez, owner of four Miami pawn shops operating as Daddy’s Cash. He added that pawn shops are “the most critical at these times when the going gets tough.”
For the first day back from a three-day shutdown, Monday was busy but not busy for Jimenez.
“We’re just going to take it day by day,” he said.
Two of his stores are closed, two are open and these two have had their hours reduced between 9 a.m. and 1 p.m., he said, adding that they were operating with half the normal workforce.
In Hialeah, Destiny Jewelers reopened on Monday and owner Ramon M. Farres described traffic as slower than usual. But it is open for business at a time when most of the city is closed.
What is he expecting?
“Your guess is as good as mine. We’ve never seen anything like it, ”said Farres, whose family has owned the business since 2005.
If the virus continues to impact local businesses, more people will flock to turn their jewelry into quick cash, said Leydi Pérez, as she stood behind a thick glass partition at Leydi Cash Jewelry near the The Hammocks area in West Kendall. She runs the store with her husband, Ciro.
“It happened in 2008 after the economic crash,” she said. “When things start to get out of hand, people get desperate.”
Industry research group IBIS World has estimated the nationwide pawn industry size to be $ 5.8 billion for 2020, employing more than 41,000 people in nearly 12,000 companies. Pawn shops have slipped over the past five years as the economy grew steadily and gold prices fell.
When times are good, more than three-quarters of pawnshop borrowers pay off their loan and get back the diamond ring or gold watch they offered as collateral. They did so with a 30-day loan that has about the highest rates allowed by state regulators. If the loan is extended, compound rates increase the repayment challenge.
Pawn shops often serve a segment of the population known as the unbanked – people without checking accounts or who cannot qualify for a credit card. They tend to operate in the poorest areas and can be controversial. Some consumer groups view the business model as usury while those in the business claim they are acting as a lender of last resort.
The unbanked are a segment unlikely to get direct help from the stimulus efforts that should help put money in the hands of working people. That’s why consumer groups are calling on the federal government, as part of stimulus efforts, to extend military protections against predatory lending rates to all consumers and to reach out to unbanked workers and consumers. low income whose jobs may not return or will take longer to return.
“The wealth gap has kept widening,” said Yasmin Farahi, senior policy adviser at the Center for Responsible Lending, a national advocacy group.
It wasn’t just the reopening of pawn shops on Monday. Longtime Miami retailer Turley Jewelers has reopened as a core business. His clients could be more affluent, looking to sell a Rolex watch, or an older client looking to convert souvenir jewelry for cash.
“I am able to help the community because people are going to need money to shop or pay their bills,” said Charlotte DePaula, owner of Pinecrest jeweler and who appealed the week’s decision. last in order to be treated as a financial person. institution.
Its customers can apply for a credit card through it to fund repairs or buy jewelry, and it’s certified by the state to weigh gold. Until health authority guidelines change, she will only allow one customer into the store at a time and expects business to pick up.
“We had several people who came to sell… I don’t know what to expect but I hope I can help people with their need for funds as this is an unprecedented time,” she said. “I have been in the community for 17 years. I have supported my community throughout this time and my heart’s desire is to provide useful service.
This story was originally published 23 March 2020 7:20 pm.