Borro, which claims to be the world’s first internet-based pawnbroker, will lend customers up to 40 per cent of the value of jewellery, watches or other valuables for up to six months.

The site, www.borro.com, has been set up with UK pawnbroker Sutton & Robertsons.

It charges interest of 6 per cent a month for loans from £1,000 to £100,000 and 4 per cent a month below £1,000.

While these rates are uncompetitive compared with credit card and personal loan interest charges, the site is intended for consumers who have been turned down by mainstream lenders and need relatively small amounts of cash for short periods.

Shipment of items to and from Borro is insured and paid for by the company.

Founder Paul Aitken said rival forms of short-term credit — such as unauthorised bank overdrafts or payday loans — could prove more expensive.

He added: “If our customers can’t repay their loan Borro sells the items they have pledged and returns any excess proceeds to the customer.

“The consequences of not paying off a loan are very clear — and it is impossible for our customers to build up any bad debt.”

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