Thank goodness for specialist lenders

Banks have been accused of being unwilling to lend in the current economic climate. But the same cannot be said of specialist loan companies such as Sport & Utilities (S&U Plc) that are throwing consumers much-needed credit lifelines - albeit pricey ones.
S&U, which trades as Loansathome4U and Advantage Finance Limited, reported an almost unchanged loan book of £75 million despite a slowing economy. An increase in demand for consumer credit such as store cards that charge as much as 399% interest (APR) helped to boost the lender's performance.

Meanwhile, an improved collection process helped to bolster the lender's cash flow from ?2 million to ?6 million. Its bank balance has also swelled from ?5,000 last year to a whopping ?1.1 million. The combination of continued demand for credit helped S&U increase half-time profits from £4.6 million to £5 million.

David Kuo, Director at financial website The Motley Fool - Fool.co.uk comments: "When the going gets tough, the tough get going. And S&U is showing traditional banks a clean pair of heels.

"The sustained growth at S&U demonstrates an appetite for credit from consumers. However, forking out for expensive loans to solve short-term needs could cause long-term problems not only for anxious consumers but for the economy too.

"The fact that some borrowers are prepared to pay as much as 399% interest shows just how desperate they are. And until such time that high street lenders stop cherry-picking the best customers, we can thank goodness for specialist lenders."