One of the largest payday lenders in the UK, Sunny Loans, is on the brink of collapse following the impact of coronavirus and a backlog of customer complaints.
Owned by Elevate Credit in the US, the company Sunny became a player in the high-cost credit industry, offering loans of £100-£2,500 at a representative APR of 1,267 per cent.
An Elevate Credit International spokesperson said: “Unfortunately, due to the ongoing economic uncertainty as a result of coronavirus and the continued regulatory pressure on the business, we have had to take the difficult decision to give notice to appoint administrators.”
In Sunny Loans’ last accounts, filed to the year ending December 2018, the company reported pre-tax profit of £78,244 down from £5.7 million in the year prior. This decrease was in spite of revenue increasing to £92 million from £80 million and the company claiming to command over a fifth of the market.
The UK’s payday market has been hit hugely in the last two years, with millions of customer complaints leading to large refunds and administration fees paid to the Financial Ombudsman.
In 2018, the UK’s largest lender in the space, Wonga went into administration, with a total refund balance of £500 million, soon to be followed by other rivals, QuickQuid, The Money Shop and Piggy Bank.
Elevate has also highlighted the coronavirus for putting pressure on the company’s finances, with no new loans funded, payment holidays granted and uncertainty for the future.