MS One to One with borro.com’s Paul Aitken

borro.com’s online pawn broking service brings one of the oldest forms of credit lending into the modern era.

“Brokers ask how easy it is,” says Paul Aitken, founder and CEO of borro.com, which signed broker distribution partnerships with Paradigm and debt management company Eurodebt this year.

“It’s as simple as this. When brokers do their fact find, they just have to ask the client if they own any assets worth more than £2,000. For deals worth less than £2,000, brokers just take a small hit on the commission,” says Aitken.

We’re sitting in Aitken’s office, just around the corner from Chancery Lane tube station on a sweltering summer’s day, next door to the Silver Vaults, which extend coolly under borro’s offices 30ft underground. The Vaults are both a specialist silver merchant outlet and the secure lock up where borro stores some of its client’s smaller valuables.

However, in a larger deal, the firm lent £50,000 the previous week on a boat the owner bought for £100,000 (see case study). That boat stays moored at the marina, the client pays an interest rate of 2.99% a month and the broker earned £1,500 up-front and possibly another £1,500 in three months if the asset isn’t redeemed.

Customers rarely struggle to repay the loan, says Aitken, who says just 10 to 12% of its deals end in default where the asset needs to be re-sold.
Lending is very roughly speaking, offered at up to 70% of the asset’s value, depending on the type of asset, but the liquidity or re-sale ease of the asset plays a large part in determining the price. One example Aitken gives is that a BMW 5 series, which can easily be re-sold, can back a loan of £10,000, whereas potential loans against other classic cars, auctioned every six months, are far lower.

“The more easily we can dispose of the assets, the more we can offer clients up-front,” he says. Objects are valued differently from culture to culture, for example, cluster set diamond rings are popular in the Indian sub-continent, so Borro has garnered a wider network of buyers in India.

Following an ongoing and by its own admission “expensive” consumer advertising campaign, the lender launched to the intermediary market at the Expo in Olympia last year and said it aims to flip its current 2:1 business split favouring consumers to primarily B2B distribution by next year.

The pawnbroker lent £2m in June and the typical borro.com customer is a time-pressured self-employed, small business owner, although its clients are a diverse bunch, it says.

“The TV advertising has also helped us on the intermediary side, because general brand awareness makes any discussion easier with the client,” he says.

Aitken and I shake hands and I am escorted on my tour of the vaults by retail operations director Ray Palmer who first walks me up to the valuations room and introduces head of valuations and ex-Bonhams and Christies auctioneer, Samantha Lilley.

The tour becomes an Aladdin’s cave-esque whirl from here. The three of us head through a series of secure doors down to the vaults 30ft underground and the temperature blissfully drops. I am shown a five carat diamond and black pearl necklace, estimated to be worth £120,000 but so unique we couldn’t picture it for fear of the owner’s wrath.

Lilley says at any one time, borro has over £0.5m lent out against Rolex watches (see gallery). Other top brands in terms of their quality as assets include Sub Mariner Rolexes with black and green straps, Patek Philippe watch brands and for ladies, Cartier’s American Tank brand.

“The quality of the manufacture is key to the valuation, not the notoriety of the fashion brand, especially if the watch is made in China,” says Lilley.

Musical boxes, a viola, a Henry Moore sculpture and several replica rings all appear out of carefully wrapped bundles in dated boxes. Borro has commissioned replica white sapphire or white paste jewellery for clients twice it says, so ladies have something to wear while the original is tucked away in the pawnbroker’s vault.

Assets borro has refused to lend against in the past include gold teeth, a gold-plated mobile phone and a “lock of John Lennon’s hair, but (ahem) genuine music memorabilia appears to serve better as an asset. Since launch in 2008, borro has lent against both a signed Beatles album and a 1993 Top of the Pops programme floor plan signed by Take That – presumably music to the client’s ears when that deal was agreed?