BRADFORD-based credit provider Provident Financial is expanding its range of loan options to people rejected by banks to fill the gap left by pay-day lenders whose operations have been curbed by regulators.

In a new move, the sub-prime lender has launched an account enabling people to borrow between £1,000 and £7,000 – but only with the support of a guarantor.

The new ‘glo’ account is designed for people with a poor credit record or who have a sparse credit history and are unable to access mainstream lending.

Provident says that with the support of a guarantor – usually a relative or close friend – borrowers can access a higher loan amount over a longer repayment period and at a lower APR than many other loans in this sector of the market.

To qualify for a glo loan, the borrower asks a third party to act as a guarantor, allowing them access to loans at a representative 49.5 per cent APR (fixed), repayable over one to five years.

Mark Stevens, managing director of Provident’s consumer credit division, said the new loan is designed to reach some of the 12 million people who are refused bank loans each year.

The glo product is aimed at people wanting to buy a car or carry out home improvements costing thousands rather that Provident’s traditional home credit customers who borrow a few hundred. Potential borrowers can apply online and will then be dealt with by telephone on a one-to-one basis – as are guarantors who are checked out before any money is issued.

“We are committed to dealing with people personally at every stage and we will have a long telephone conversation with would-be guarantors as part of that process,” Mr Stevens said.

“Unlike other lenders in this sector who approach guarantors as soon as the borrower misses a payment, if the borrower has a problem, glo will work with them to find a solution they can manage, only asking the guarantor for payment as a last resort.

“Also, glo accepts both guarantors and borrowers who are tenants and also operates without any fees for set-up or late payments.

“Before confirming any loan agreement, glo will speak with the borrower to ensure they can afford the repayments and that they fully understand their commitment. A similar conversation takes place with the guarantor to make sure they would be willing and able to make repayments should they be called upon to do so,” said Mr Stevens.”

Mr Stevens added that action by the Financial Conduct Authority to cap interest charges and default fees charges made by pay-day lenders was a welcome development.