Thomas Reid, 68, had collected £74,000 of loans and had £105,000 of loans outstanding from clients in his home town of Motherwell and across Lanarkshire at the time of his arrest in June 2010.
He had been giving loans and collecting the money from people's homes, despite failing to renew his credit licence with the Office of Fair Trading.
Reid has also been fined £750 after earlier pleading guilty to breaching the Consumer Credit Act at Hamilton Sheriff Court.
But the court heard yesterday that the authorities could not account for £399,000 after a full assessment of his finances.
Lindsey Miller, head of the serious and organised crime division, said: "Thomas Reid operated as an illegal moneylender, a practice that can have serious ramifications for those who took money from him."