WHILE MUCH of the economy braces itself for hard times, the pawnbroking sector is booming, after the chief executive of the National Pawnbrokers Association said that 96% of its members had seen increased business in the past six months.

Des Milligan said that leading pawnbroking chains Harvey and Thompson and Albemarle & Bond have shown a 10% rise in increased pledges in their year-end accounts.

He added that almost all members, including the 35 outlets in Scotland, "anticipate a further increase in the next six months".

The number of pawn shops has been steadily increasing again after years of decline. Having fallen from 5000 in the early 20th century to around 800 thanks to improved credit terms and job security, Milligan said that there has been a 10% rise in members in the past year.

He said this was partly due to a "small, but growing, sector of apparently rich individuals who prefer using pawnbrokers rather than banks for short-term loans".

"The reason is that if they need money quickly because of cashflow issues or want to invest in expansion, a bank will want to see past performance and may well insist on a minimum of a two-year or three-year term with charges for early settlement. A pawnbroker will allow redemption at any time and it may well be a quicker, more convenient and less expensive option," he said.

He added that there is no credit scoring in pawnbroking, which means that "there is no impact on your credit rating if you can't pay back the loan". At a time when credit card companies like Egg are cancelling customers' cards, pawning jewellery may become the only alternative means of credit for some.

Pawnbrokers have worked hard to free themselves of their poor-man image in recent years.

Albemarle & Bond and Harvey and Thompson, with seven stores each in Scotland, have all but dispensed with the famous three balls of the pawnbroker, incorporating them into a more abstract signage. Both present modern shops situated in shopping malls and are more akin to jewellers or a building society than the bric-a-brac curiosity establishments of old.

But even those that have been slower to change are reporting strongly improved business. Edward Fox, owner of Robert Biggar, Glasgow's oldest-established pawnbroker, having opened its Argyle Street shop in 1830, said: "There's no doubt that in the current climate today a lot more people do not have the spare cash they might have enjoyed in yesteryear.

"I hear that a growing number of home owners are only a month away from eviction. For that reason I am absolutely delighted to help my ever-increasing list of clients, some of whom have never pawned before. I always explain terms and point out that using a pawnbroking service is a quick fix if used correctly and that we are always there for them.

"In May 2008, I lent more in two of my shops than between all three in any month in the past five years", he said. "Yesterday, I was offered an Aston Martin as collateral on a loan."

Sarah O'Neill, legal officer at the Scottish Consumer Council, said: "This is a regulated industry and people using the services of pawnbrokers will be asked to sign a written agreement under the Consumer Credit Act. While pawnbrokers can be an attractive option for some people who have difficulty in borrowing money from banks or building societies, their interest rates tend to be higher.

"Consumers should read the small print on the agreement before they sign. People should be aware of how much this sort of loan is going to cost them, and that if they can't afford to redeem the items pawned by the agreed date, they will lose them."