Chicago pawnshops: How many is too many?

Industry expands, but each new storefront draws scrutiny

December 1, 2011

By Natalie Moore

Given the economic downturn it’s easy to ignore the fact that some business sectors are actually doing well. One of them is the pawn industry. The number of pawn licenses in Illinois is up. Chicago alone has 60 pawnbroker licenses, with 13 added this year.

It’s a trend that’s attracted some controversy. To some, pawnshops fit well in a diverse, urban economy, but other residents push back, saying this kind of retail is just not smart.

The Little Village neighborhood has a bustling 26th Street business corridor. Restaurants, grocers and jewelers operate in storefronts.

Contreras: This community wants economic development, not economic declinement.

Julie Contreras was part of a coalition trying to keep out pawnshops. They didn’t succeed. Two of Chicago’s pawn licenses this year are in the Little Village neighborhood. It now has six pawnshops.

EZ Pawn, which is one of the corporate chains that’s expanding, declined to comment for this story.

Contreras: The Hispanic Americans that live in this neighborhood do not want to be known as the pawnshop capital of the city of Chicago. We’ve built cultural integrity, security and a vibrant heart for the Mexican community here in Little Village.

The expansion of the pawn industry is on the radar in another part of town, too. Ald. Joe Moreno has recently approved two pawnshops in his 1st Ward. That brings the number to four.

Some of his residents balked, but the alderman says the existing pawnshops haven’t been problematic , and besides, they were there before Wicker Park and Bucktown became trendy areas.

Moreno: I have to be realistic. I didn’t run on opening a pawnshop. It’s not in my top 10 things. But they do offer a service to the community and, I would submit in these times, the banks are not offering.

Moreno’s gotten one pawnshop to sign a community benefits agreement , so that particular business will contribute to college scholarships and beautification projects.

But even Moreno has his limits. Two more pawnshops wanted to open in his Chicago ward … but he said no.

Pawnshops face an image problem. They’re seen as seedy and crime-infested. But experts say there are a few things that don’t get across to critics or the general public.

For one, pawnshops are highly regulated. Pawnbrokers report serial numbers to stymie thefts and take photos of items. The Illinois Department of Financial and Professional Regulation reports very few actions against Chicago pawnshops.

Another reality is that pawnshops are pretty much everywhere – they don’t set up just in low-income, minority neighborhoods. That’s compared to predatory payday lenders, which concentrate in those communities. Pawnshops exist near Chicago’s Gold Coast and Jeweler’s Row, and they’re sprinkled throughout neighborhoods on the South, North and West Sides.

Even if you’ve never been inside a Chicago pawnshop – you might be familiar with Shelly’s Loan Co. It’s on the corner of 47th and Prairie in Chicago’s Bronzeville neighborhood. Shelly’s gained a bit of fame 30 years ago when it was featured in the movie “The Blues Brothers,” with Ray Charles behind the keyboards. It’s still around today …

Store employee: Hello Shelly’s

The family-owned business has guitars hanging on the wall and even a set of golf clubs. Also … jewelry that catches the eyes of customers.

Customer: Are these real diamonds?

Elizabeth Lowis’ family has been in the pawn business for four generations. She runs Shelly’s and knows many of the customers by name. She says pawnshops are two things: short-term lenders and neighborhood retailers.

Lowis: A pawn, a loan, is actually intended to be a fraction of the value of what your item is worth. So you’re borrowing against your collateral item. What that means is you come with a ring, a bracelet -- whatever that item might be -- and we give you a portion of the value.

Shelly customers have 90 days to pay that loan back, with monthly interest and other charges totaling $2 per $10.

Lowis: A lot times it’s just getting over that little bit of a hump. Some people get tickets or have an unexpected expense that came up that they need the extra money for.

This includes people like Denise Smith, who pawned her camera to pay for textbooks.

Smith: I’m a college student so I’ve been into Shelly’s this year alone possibly 10 times.

There’s little research on pawnshops that can settle questions about whether pawnshops are good or bad for neighborhoods, but Brenda Parker’s trying to change that. She teaches at the University of Illinois-Chicago and is studying second-hand retailers. Pawnshops fit in that category.

Parker: Pawnshops have been around for many decades and in some cases people buy their jewelry there or they buy camera equipment or these kinds of things at low costs. In some cases, we can think about these shops as providing goods that wouldn’t be available to families of lower means.

Pawnshops have been around for thousands of years, and throughout history have functioned as ways to provide people with quick cash. They likely aren’t going anywhere, especially in today’s economy.

Music Button: Sharon Lewis & Texas Fire, "What's Really Going On?" from the album The Real Deal, (Delmark)



Pawnshops in Chicago

View Pawnshop licenses in Chicago in a larger map

Correction: An earlier version of this story misstated the fee structure at Shelly's Loan Co. Like other Illinois pawn shops, Shelly's charges a monthly total of $2 in interest and fees for every $10 borrowed. 

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