Wonga is a short-term loan company that has been heavily criticised recently for loaning money to customers with an interest rate of around 4000 percent. The company are best known for their short-term loans which allow customers to borrow money without any sort of credit checking.
The company stated that they are going to be soon offering business loans to companies and it’s possible that these will be approved within just 15 minutes. The company said that these loans are going to be available at a far more reasonable rate, however it is still high, at 17 percent.
The loans are going to be available for amounts between £3000 and £10,000. It is going to be possible to borrow the money for a minimum period of one week, and a maximum term of one year. The loans are going to have to be repaid by the businesses on a weekly basis and there is going to be an additional fee tacked onto the total borrowing amounts of 0.3 percent.
The company said that they are entering the business loan markets because many firms are not able to raise funding currently. Research that has recently been released by the FSB has shown that November was one of the worst months for firms borrowing as nearly 60 percent of companies had problems paying back loans because clients paid for services late.
In recent years a number of loan applications being refused by banks has increased dramatically, data has recently shown that between 2007 and 2010 a fall of nearly 25 percent in loan applications that were successful has occurred. It has also been shown that businesses who wanted a business overdraft were rejected about 40 percent of the time.
Head of business services for Wonga is Russell Gould and he has commented, “We are wanting to target businesses because they often need money to meet a short-term financial requirements. This is not the sort of money they would take from a traditional bank as it is exclusively for use in the short-term, hence why we are only offering the loan products for a maximum period of one year.”
The loans are only going to be available to companies with limited liability as well as partnerships who’ve been in business for at least three years.