You’ve heard of a home-equity loan. But what about a jewelry equity loan?
A number of investors and high-net-worth individuals are reportedly opting in to this new financial instrument. As industry insiders put it, jewelry equity lending lets you access liquidity to grow a portfolio without putting traditional assets at risk.
As far as Grit Daily’s research team can tell, Mills Menser, the third-generation jeweler who presides over Diamond Banc pioneered the trend. After taking over his family jewelry business, he knew there was an opportunity for him at the intersection of jewelry and banking. He created Diamond Banc, referred to as the “bank without the bureaucracy.”
Through digital lending, he grew the company nationally. At that point, he had many CEOs and investors who wanted to become clients.
Menser takes a so-called “modern approach to an old process” by helping clients gain liquidity in their jewelry. It’s seemingly a win-win for several reasons. Not only are his clients able to avoid selling their jewelry to get liquidity, but they can avoid using stocks and real estate as collateral.
Home-equity loans are common practice for gaining liquidity but they come with major drawbacks. By the time you clear the (in some cases very much warranted) bureaucratic hurdles of a traditional loan, the opportunity might be gone. Plus, real estate or other investments might be at risk if you can’t complete the terms of the loan, which can impact your credit score.
The key advantage of jewelry-equity lending is that the loan amount is only determined by the pledged item’s liquid value. Unlike traditional loans, the involved process of sharing your income and credit score isn’t required. Reportedly, if the client decides not to repay the loan, there is no impact on his or her credit score. At that point, the asset changes ownership.
What’s in a Name?
Menser knew that the key to success is the professional, confidential practice of a traditional bank. In order to make Diamond Banc a legitimate financial solutions provider, separating it from pawn shops and discount jewelry buy-back shops was crucial. Thus, Diamond Banc was born as a “bank without bureaucracy,” attracting CEOs and investors who wanted investment capital.
In 2018, Diamond Banc partnered with Diamond Cellar Holdings to open stand-alone offices nationwide. Owned by the Johnson Family, they are colorably one of the largest, respected, independent jewelry stores in the US.
Now, jewelry owners are using their Rolexes, diamond rings, and other luxury pieces to grow their portfolios. This is a possible game changer for those who didn’t know this type of lending option exists. Jewelry equity lending could be a reliable, low-risk way to gain short-term liquidity. Or it could lead to a proper bubble and crash all over again.
Jordan French is the Executive Editor of Grit Daily. An award-winning journalist, he is on the editorial staff at TheStreet.com and a Fast 50 and Inc. 500-ranked entrepreneur.
He is the founder of Notability Partners and the co-founder of BNB Shield, Lisbon Hill Farms, Status Labs, BeeHex, BlockTelegraph, and Grit Daily. A biomedical engineer and intellectual-property attorney, French is the author of upcoming book, The Gritty Entrepreneur.