Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting.

🔍 Inventory + Collateral Risk

• Is inventory owned by the business or held as collateral for pawn loans?
• Are inventory levels reconciled with pawn ticket balances and redemption cycles?
• Are high-value items (jewelry, electronics) tracked with item-level data?

💵 Revenue Breakdown & Sustainability

• Is lending interest income clearly separated from retail sales revenue?
• Are redemption rates and historical defaults disclosed?
• Is retail revenue supported by transaction logs or POS data?

👷‍♂️ Owner Labor & Compensation

• Does the owner work the counter or handle pricing/authentication?
• Has a market wage been applied for owner labor?
• Are family members on payroll or included in addbacks?
• Are all labor roles clearly allocated and normalized?

💻 Systems + Compliance

• Is inventory tracked using a modern pawn shop POS system?
• Are licensing and state-level regulatory requirements met?
• Are there compliance risks tied to interest rate caps or collateral handling?
• Does the business rely on manual or unverified customer tracking?

🚩 Red Flags

• Addbacks include family labor, unverified expenses, or personal travel
• Interest income not reconciled with redemption data
• No clear separation of retail vs. pawn revenue

📌 SBA SOP Tip

SBA lenders need to consider normalizes owner labor and distinguishing between retail and lending operations. Licensing status and collateral ownership materially impact free cash flow and business value.