Davenham is cutting its final dividend to shareholders from 10.38p to 7p, making a total of 11.68p for the year to June 30, down from 14.83p.
It is also imposing a recruitment freeze across the business.
Chief executive David Coates said the measures followed a `bitter sweet year' in which underlying pre-tax profits surged 13 per cent, from £11.6m to a record £13.1m, as revenues climbed 27 per cent from £41.8m to £53.1m.
Davenham's loan book increased from £271m to £284m.
However, bad debts grew from £6.3m to £7.4m and the company has tightened its lending criteria.
In addition, the property market slowdown has led to a fall in demand for loans although trade and asset finance lending have grown.
Davenham provides loans of between £10,000 and £5m to more than 5,000 SMEs for property deals, plant and equipment and stock.
It employs 190 people across seven offices, of whom 120 are based in Manchester.
Mr Coates said he did not expect much growth this year although he added: "We are very much open for business."
He said Davenham had taken decisive action to meet the challenges of the downturn by controlling costs.
The shares were virtually unchanged at 118p, down 0.5p.
Davenham is expected to undergo a refinancing next year.
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