A recent high profile entrant into the secured loans marketplace, Picture Loans, has suspended trading due to funding difficulties - ie they have run out of money to lend and are having trouble getting any more. they say they are not taking any new customers at the moment and taking steps to "re-shape" their business in the light of the current economic climate.

What happens in the secured loans business is that lenders go out to the wholesale money markets and take out big loans themselves and then, after adding a profit margin for themselves, lend that same money onto new borrowers in smaller chunks. When the banking system was cash-rich four years ago, Picture came storming into the market with funding from 2 major banks and quickly built a recognised brand through press, internet and TV advertising. They set up big offices in Newport, Wales and started to turn decent profits very quickly. But then things started to go wrong for the new loans company. One of the streams of profit for any loan company was the sale of protection insurance and last year that product area came under pressure from regulators who investigated the way firms were selling that type of protection insurance.

Next came the global credit crunch and the banks who had previously provided the cash reserves for Picture to make loans from started to get cold feet. Picture failed to secure new cash and was forced to stop trading, albeit temporarily they hoped. But a few months have passed now and there's no sign of Picture opening up again.

The future of Picture Loans is still uncertain and there are rumours of a buyout but their website puts on a brave face saying the future of the company is positive.