Wonga.com launches new loans service for small businesses
Monday 07 May 2012
A payday lender today launched a service that will offer small
businesses access to loans of between £3,000 and £10,000 in as little as
Wonga.com said its entry into the business market will help those companies waiting for longer-term funding or if big invoices have been paid late.
Loans will be for a term of between one and 52 weeks, with borrowings repaid on a weekly basis on interest starting from 0.3% a week.
It is the latest growth in a short-term loans sector that has mushroomed since the arrival of new players from the United States.
However, the industry has been accused of preying on those in financial trouble, prompting the Office of Fair Trading to investigate whether some firms target people unsuitable for credit and are rolling over loans so that the charges escalate and they become unaffordable.
Payday lenders argue that customers are happy with the service and that they fill a gap in a market left by Britain's mainstream banks.
Wonga said recent statistics showed 55% of small businesses which applied for an overdraft for the first time last year were turned down while 43% of first-time loan applications were also rejected.
Errol Damelin, who set up Wonga in 2007, said: "All our research and speaking to other entrepreneurs tells us that small business lending is broken and we intend to use our platform to offer a real alternative."
Wonga uses automated real-time technology which means the application process takes around 12 minutes.
Mr Damelin added: "Money will be in approved firms' account as fast as their banks will allow, typically between 15 minutes and 24 hours, although we'll only be helping companies that our technology identifies as being able to afford the loan they are applying for."
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 PornHub turns masturbation into energy in bid to save the planet
- 5 Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...