How Much Money is Required to Get Started as a Pawnbroker?

budgeting for pawn shop

If you’re thinking about starting a pawnshop and becoming a licensed pawnbroker, then you’re probably aware of the many laws and regulations you’ll have to comply with before you can even open your shop. One of the requirements for getting started as a pawnbroker, whether surprising or not, is a certain amount of money.

Before starting a pawn shop, you’ll have to have a certain amount of money available in order to obtain your license and be legally permitted to begin business. How much is it? Well, it’s not a straightforward answer.

Why is There a Money Requirement?

Pawn shops are mainly used for loaning money which means that you need funds to start with. You can’t pull money out of thin air. As such, building a loan balance should be one of your primary focuses when you first start out as a pawnbroker. This is why you’ll see a minimum net worth requirement in many states and why licensing offices will require proof of enough funds.

When you first set up your pawn shop, you’ll have a lot of expenses to cover, such as licensing fees, location rent, and inventory costs. To help cover this, you need to have a certain amount of funding already available.

How Much Money is Required to Get Started as a Pawnbroker?

The requirements for being a pawnbroker vary greatly depending on your country and state. In the United States, for example, the requirements for Floridian pawnbrokers differ from the requirements for Californian pawnbrokers. You have to abide by the laws of your state, even if you’ve only just moved and were perfectly legal in your old state.

Raising the funds to open your pawn shop is one of the biggest challenges that many future pawnbrokers run into. Most states will require you to show proof of $50,000 or more, though this will vary from state to state.

In some cases, you may be able to get away with as low as $15,000, but this is very rare and only for very small pawnshops. 

Aside from the required net worth and funds, you’ll need money for supplies like storage shelving, security cameras, safes and more to get started. One crucial thing to keep in mind is a pawn shop Point-of-Sale software. PawnMaster is an invaluable inventory management and point-of-sale pawn shop software that can truly make a difference in your daily operations. With a POS software like PawnMaster, you can process transactions faster while streamlining your bookkeeping and generating reports.

The actual costs of setting up your pawn shop are varied. You may be planning on opening just a small shop, and you aren’t planning on significant growth, so you assume you won’t need as much money to start off with. However, when you’re planning for your shop, be careful not to underestimate the necessary funds.

One of the biggest reasons pawn shops fail is undercapitalization. If your shop is undercapitalized from the start, you will face many difficulties in the future. If you want a $200k loan balance, you would need to loan out about $400k minimum, and bear in mind that that doesn’t count any purchases you make or payroll carrying costs.

It’s crucial that you correctly analyze and even overestimate your size and growth expectation so that you don’t end up accidentally under capitalizing your shop. If you make sure to account for a bit more than you expect, you’ll have enough to cover any unexpected changes or sudden growth.


There are many laws and standards that pawnbrokers must meet before they can open shop, but there are also a lot of purchases to be made. You need a solid loan balance and a properly equipped shop to run your business efficiently, so don’t under budget or assume you can cut corners.