Pawnbroking business; application for a permit

If you wish to operate commercially as a pawnbroker or pawnbroker's agent, you need a permit.

Description

The pawnbroker grants a loan of money against the deposit of a pawn to secure the loan plus interest and costs of business operations.

The pawnbroker brokers pawn transactions by granting an advance on pawns handed over to him/her and pledging the pawns in his/her name with a pawnbroker.

Anyone wishing to conduct the business of a pawnbroker or a pawnbroker's agent requires permission from the competent authority. The permit may be subject to conditions insofar as this is necessary for the protection of the general public or the pawnbrokers.

In the case of partnerships (e.g. OHG, KG), each managing partner is a trader. In the case of legal entities (e.g. GmbH, AG), permission is granted to the legal entity.

Prerequisites

If you want to operate as a pawnbroker, you must provide special collateral and evidence.

  • You must provide proof of required funds or collateral for the first six months. This can be credit balances or a bank guarantee.
  • You must also obtain insurance against fire damage, water damage, burglary and robbery and present it at the time of application. A safe must be available for jewelry.
  • You must secure your premises against burglary with an alarm system.
  • For auto pawn shops, the issue of potential environmental hazards from vehicle parking areas must be addressed.

Permission will be denied if:

  • Facts justify the assumption that the applicant does not possess the reliability required for the business operation.
    As a rule, anyone who has been convicted of a crime, theft, embezzlement, extortion, fraud, embezzlement, forgery, receiving stolen goods, usury or an offense against the law against unfair competition within the last five years prior to the application does not have the required reliability.
  • The applicant fails to prove the funds required for the business operation or corresponding securities.

Procedure

You must apply for permission to operate a business as a pawnbroker or pawnbroker's agent to the relevant authority.

After the examination, you will either receive the permit or a notice of refusal. A permit may be subject to certain conditions.

Special notes

The pawnbroker must notify the competent authority at the beginning of the business operation which rooms he/she uses for the business operation; furthermore, he/she must immediately notify any change of the rooms used for the business operation.

The pawnbroker is obliged to keep records.

Deadlines

You must apply for the permit before starting the activity. Only after the permission is granted, you are entitled to practice the trade.

Required documents

  • The following documents may be required:

    • Identity card or comparable identification document (copy)
    • Non-EU citizens: residence permit (copy)
    • Proof of entrepreneurial legal form
      • Company headquarters in Germany:
        • In the case of registered companies: Excerpt from the commercial register and, if applicable, a copy of the articles of association (e.g. in the case of a civil-law partnership (GbR)).
      • Company domicile abroad: documents from this country proving the legal form.
    • Proof of personal reliability
      • Residence in Germany:
        • Certificate of good conduct
        • Extract from the central business register for natural persons and, if applicable, legal entities
      • Residence abroad: Documents from your home country proving that you have the personal reliability to carry out the requested service.
      • The authority may request further documents in individual cases which are suitable for making a statement about your personal reliability as an applicant.
    • Proof of the funds and securities required for the operation of the business
      • Residence in Germany:
        • Extract from the debtors' register
        • Information from the insolvency register
      • Residence abroad: Documents from your home country as proof that you have the necessary means and securities at your disposal
    • Proof of insurance
    • Floor plan of the premises intended for the business

Status: 16.02.2022

Responsible for editing: Bayerisches Staatsministerium für Wirtschaft, Landesentwicklung und Energie

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