Concerns have been raised after a short-term loan lender signalled its intent to set up a shop in a prime location in Bradford city centre.
Croydon-based Oakam Ltd, which opened its first branch in 2007 and now has 22 outlets across London and the Midlands, has submitted a planning application to Bradford Council to develop a former jewellers store at 2 Tyrrel Street.
But councillors and the organisation representing city centre traders sounded a note of caution.
On its website, Oakam describes its services as a “high-cost credit product, suitable for short-term needs and not for longer-term borrowing.”
It advertises a 676.6 annual percentage rate, based on an annual interest rate of 977.4 per cent, with loans of £200 to £600 available over three to six months. Paying back a £600 loan in monthly installments over six months would cost £955.
Councillor Imran Hussain, deputy leader of Bradford Council, said: “We have to be mindful in terms of loan companies, as in some cases they do charge extortionate rates.”
Liberal Democrats group leader, Councillor Jeanette Sunderland, said the application would provide “a good test of the Council’s actions” on the type of company it wanted to give permission to in the city centre.
Mary Frame, of Bradford Chamber of Trade, said the group would not support the proposal, as loan companies would not help attract people into the city.
“Prime city centre locations shouldn’t be going to this type of firm, and it is disappointing that we can’t attract a higher calibre of business,” she said.
Research by Bradford-based debt charity Christians Against Poverty (CAP) revealed that four out of five of its clients who took out a payday loan last year did so to cover basic food costs.
A spokesman said CAP could not welcome another short-term lender arriving in the city centre. “We know from our own research that people using their services are often doing so out of desperation. We would prefer to see those same people getting help with their financial problems in the long term,” said the spokesman.
The proposal comes after the Council relaxed planning regulations last week in a bid to tackle the blight of empty shops in the city. The new rules mean developers do not have to apply for change of use to open shops, restaurants, bars or offices, but still need planning permission for certain types of business.
A spokesman for Oakam said: “We are not in a position to offer any comment, apart from to clarify that we are not a payday lender.”