Early in 2010, a few months before consumer credit providers were required to apply for registration under the National Consumer Credit Protection Act, Philip Johns did a headcount. Johns is the chief executive of the National Financial Services Federation, which represents short-term lenders.Johns identified 248 small independent businesses operating in the short-term (or payday) loan market. This week Johns said that number was down to 31.What caused this decimation is regulation. Short-term lenders have had caps imposed on the rates and fees they can charge and they must comply with much stricter responsible lending rules.Johns said: "It was appropriate that some of them left the industry but most of the small operators have been buried by the regulatory burden. These guys have to apply for the same credit licence as Commonwealth Bank."Johns said business volumes were still growing, despite the exit of a number of players.The corner store lenders have been replaced by mid-tier financial institutions with the economies of scale to cope with the cost of regulation. One consequence of this is that small-amount lending, which has always had a bad reputation, may be transforming into a more professionally managed and ethical business.At an investment conference convened by broker Wilson HTM last week, several of these institutions talked about the strong growth opportunities they see in short-term lending.The chief executive of Money3, Rob Bryant, said that larger operators could build a sustainable business without having to charge the high rates that gave the industry a bad name in the past. The company has two divisions - secured and unsecured lending. Unsecured loans are between A$1000 and $5000 offered for short terms. The value of unsecured loans grew from $10.2 million to $22.3 million in the six months to December.Secured loans are between $2000 and $40,000 and are used to purchase an asset (usually a car). The value of secured loans grew from $21.9 million to $32.7 million in the six months to December. Last year, Money3 bought the assets of another payday lender, Cash Store, from its administrator. It re-branded 33 Cash Store branches last September, taking its network to 70 branches.Business has been good; the company made a net profit of $3.1 million for the six months to December - an increase of 93.8 per cent over the previous corresponding period.Credit Corp launched a consumer lending business during the 2011/12 financial year. It started with a product called MoneyStart, providing secured and unsecured personal loans to borrowers with impaired credit histories, and has added a second product, CarStart.The loan book has grown quickly, from $19 million at the end of June last year to $35 million at the end of December. Credit Corp's chief executive, Thomas Beregi, said the lending business would make a profit in 2015.Like Money3, Credit Corp is setting rates well below the regulatory caps.Beregi said the business was becoming one that relied on efficiency, ease of access and speed of execution, rather than on high rates.Philip Johns agrees. He said the professionalism of the