Is it possible for an industry to be both cyclical and counter-cyclical? Companies offering online payday loans might just emerge from the recession just as strong, possibly stronger, than they fared in the downturn.

The popular perception of payday loans companies is they do well when factors of personal finance are down. That’s easy to imagine – when people make less money they have to borrow more frequently. Particularly when credit is tight and traditional forms of lending (e.g., credit cards) are less available to people, borrowing via paycheck loans is a natural default for millions of the still-employed (payday loans, as the name makes clear, are available only to those who have jobs).

And that has happened in spades during the current recession. Payday loans companies have become a very solid part of the economy. Formerly two-earner households, taken down to one paycheck while one partner is laid off, run up against emergency expenses that require a quick infusion of cash because they’ve either maxed out their lines of credit or have none in the first place. Hence, the role of the payday loan in a recession.

Online payday loans transformed the industry

However, in an emerging recovery, as employment rebuilds, payday loans are expected to continue their ascent. Why? It’s simple: online payday loans are different from bricks-and-mortar cash advance stores.

In the old days (pre-2005, or thereabouts), most payday loans required a trip to a retail store. Most were located in certain neighborhoods with lower income demographics. It was a barrier to a large part of a now-expanded market comprised of middle and even upper-middle income salaried employees. After all, they still find themselves short on quid from time to time. Now, with online payday loans there are no geographical barriers that would cause income-level barriers.

Also, because payday loans are employment based, individuals who are working but whose credit scores aren’t yet fully recovered from recessionary circumstances will still need this type of cushion. People who are turned down for other lines of credit due to credit ratings usually still qualify for payday loans .