AS THE credit crunch leaves banks too terrified to lend money, a long-neglected source of finance is returning to fashion in a big way.

Pawnbrokers are coming into their own as a ready way of raising cash for struggling businessmen and residents alike.

Hocking the family jewels for rent money is one of the depressing scenarios which used to dog the pawnbroking industry. But Bill Murphy, 66, the owner of Epping's only pawnbroking shop, believes the negative image once associated with the trade is now a thing of the past.

He said: "Years ago you had a pawnbroker on every street corner and you would hear stories of taking grandad’s radio in for cash to pay the bills. It definitely got a bad reputation.

“And then we had an era of hire purchase and easy lending when it was very simple to keep borrowing money. That hit the pawnbroking industry hard.

“Now there is a reluctance to lend again, so people are being turned down by the bank – often unfairly – and they come to us to use a convenient and trustworthy service.”

Mr Murphy, a watchmaker who has run Victoria Jewellers for 20 years, offers a service which seems simple when compared to the bureaucracy and caution of the banks.

Customers take items – usually jewellery or watches – into his shop in High Street and Bill values them and agrees a loan amount.

The customer can then enter into a seven-month contract – with a monthly interest rate of five per cent – with an option to redeem the loan at any time and have their item returned. They can also renew the loan agreement at the end of the term.

Mr Murphy said: “It really is very simple, and we get customers who come in regularly because they are happy with us and trust us.

“We have given out loans from £60 to £12,000 – that was for three very nice watches last year – and many of our customers are business people who need short-term finance.

“For them it is a lot more accessible than going through the bank, and they feel a lot happier about securing the money against jewellery rather than their homes.”

Mr Murphy – who is looking to expand his pawnbroking business to include classic cameras, musical instruments and other collectibles – is a member of the National Pawnbrokers Association (NPA), which reported a 75 per cent increase in business last year.

Des Milligan, NPA spokesman, said: “Pawnbrokers are very highly regulated under the consumer Credit Act of 1974. I often have meetings with the Office of Fair Trading, and they get very few complaints about pawnbroking.

“Customer satisfaction is really high.”