Credit booms as recession looms

Lenders 'may not have cash to satisfy demand'

Business is booming at third sector credit providers because of the recession - and some are worried they will not have the money to satisfy demand.

"Our members say there's been a big increase in demand," said a spokesman for the Community Development Finance Association. "But many are raising concerns about the escalating need for funds.

"The message we're getting is that organisations still have capital but, if the rate of borrowing continues, there could be problems in 2009."

Community development finance institutions lend and invest in deprived areas and underserved markets that cannot access mainstream finance. Their investments and loans totalled £287m last year.

A spokesman for the Association of British Credit Unions said the number of requests for loans was going up, but this had been matched by a boom in savings, allowing credit unions to continue lending.

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