Fisher Law Corporation Negotiates $9M Line of Credit for Pawnbroker
David S. Fisher recently negotiated the successful close of a $9M line of credit on behalf of his pawnshop client. The lender was unfamiliar with the non-recourse collateralized loan business model of pawnshops which complicated the transaction. The documentation was extensive, requiring a comprehensive collateral security agreement, personal guarantees, deeds of trusts on real property, assignments of life insurance, subordination agreements, an attorney opinion letter, and other loan documents.
“Despite the fact that this was a nine million credit facility, the complexity of it was increased because the lender normally loans on a factoring basis," Fisher said. "From a legal standpoint, significant corporate, banking, securitized personal property and tax issues were involved.”
Obtaining lines of credit and alternate sources of funding is often a vital part of a pawnshop’s business in order to make more and larger loans to its borrowers. Traditional banks don’t always understand how a pawnshop operates and often encounter hurdles accepting chattel paper (i.e., pawn tickets) as collateral for their loan.
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DAVID S. FISHER, ESQ.
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