The credit crunch has meant hard times for banks, but the tough conditions have provided new opportunities for licensed moneylenders, who have reported in increase in business in the last year as mainstream financial institutions have curtailed lending activities in a worsening economic environment.

Provident Financial, the largest "home credit" business in the UK and Ireland, with operations throughout the Republic, last month reported a 6.3% increase in customer numbers year on year, citing a "restricted supply of credit to non-standard consumers" due to tightening criteria among banks and near-prime lenders.

According to the Consumer Credit Association (CCA), an umbrella body for moneylenders in Ireland, the declining availability of personal credit from banks, credit unions and other prime sources is driving consumers to seek small loans from moneylenders, who provide short-term credit with modest weekly repayments – but usually at APRs much higher than elsewhere.

The CCA told the Sunday Tribune anecdotal evidence pointed to an increase in enquiries to moneylenders this year after many years of contraction in the sector. The number of licensed moneylenders has been cut in half in the last five years. According to the CCA, some of that decline has been the result of consolidation, but a buoyant economy and low interest rates also made bank loans far more accessible to the moneylenders' traditional customer base.

"At some stage, like now, the banks won't be so free with their money," said Pat Quinn, director of R&P Credit and a spokesman for the CCA. "If they can't get money elsewhere, some people will come to us."

Moneylenders are concerned, however, that just as business is picking up, the financial regulator's plan to introduce a new, stricter consumer protection code for the sector in December could eliminate any gains they might be make and force many of them out of business.

According to the CCA's submission to the regulator, published just over a week ago, many of the new rules are unnecessary and would needlessly add costs which would ultimately be passed on to consumers.

Mabs and the Department of Social Welfare support the new code.