It looks as though another specialist loan company is facing difficulties this week, as Welcome Finance announced that it was placing a cap on the amount of new lending it was prepared to undertake.

Welcome Finance, who deal exclusively with loan brokers and financial intermediaries and specialise in secured loans in the adverse credit and sub-prime sectors, has told those brokers holding agencies that it intends to place a limit on the availability of secured loans for at least the next two months.

The news comes as Welcome’s parent company, Cattles, has recently applied for a banking licence, which will allow the company to expand its business by accepting retail deposits from customers and is currently awaiting approval from the Financial Services Authority (FSA), but the company’s share price has dropped significantly, causing concerns over the future of the bad credit loan provider.

The cap on new secured loans comes as bad news for both borrowers and brokers alike, as it limits the options for them to source a loan for a client with a less than perfect credit history even further, following several other secured loan companies withdrawing from the sub prime market altogether over the course of the past few months.

Meanwhile, Cattles have announced that they are still committed to the intermediary adverse secured loan business over the long term and have no plans to withdraw agencies at the present time, despite limiting the amount of new lending they are prepared to offer.

A spokesman for Cattles, Paul Marriott said on Monday this week “We plan to stay in the intermediary market for second charge loans, but given the current market conditions we are carefully managing the level of business across all of our agencies.”