The Association of Short Term Lenders (ASTL) found that members wrote £2.7bn of loans in the year ending 31 March, an increase of 16% on the previous year.
There was a drop in the value of applications in the quarter to the end of March compared to December, down 9%, although less than the dip of 19% seen in March 2015 compared to the December 2014 quarter.
Benson Hersch, chief executive of the ASTL, said the only way was up for short-term lending.
“Bridging finance continues to power forward and is now an established niche product,” said Hersch.
“Members are positive about their business prospects, even if slightly less positive about the economy as a whole.
“Figures on the economy released last week do cause me to sound a note of caution, however, and there remains some concern, due to the uncertainty about the results of the June referendum, which may yet have an unknown effect on the market,” he added.
The value of applications increased by 20% year-on-year, although the value of the loan book dipped slightly, by 4%, which the ASTL said indicated that loans are being paid off a faster rate than previously.
Hersch said growth in the sector is expected in the next quarter.
“As applications begin to pick up over the next quarter, despite some negative factors, the need for bridging finance is likely to continue to grow and our members are well placed to take advantage of opportunities,” he said.