Wonga is set to offer small business loans
CONTROVERSIAL payday lender Wonga has begun offering loans to small businesses which can be approved in just 15 minutes.
The private equity-backed lender will offer firms loans of £3,000 to £10,000 for between one and 52 weeks. Interest rates will be fixed at between 0.3 and two per cent per week, depending on the level of risk attached to the loan.
Wonga has been criticised for its costs, charging simple interest to consumers of just under one per cent per day, but it says it is transparent with strict acceptance controls.
Applicants to Wonga for Business must provide information about their company and its directors, who personally guarantee the loan. Wonga chief executive Errol Damelin said the loans would “put customers in control… while always knowing the cost and not being lumbered with time-sapping paperwork and presentations to subjective bank managers.”
A spokesman for the Institute of Directors said: “I am not sure this is going to sort out the problems of small business access to finance.”
Anil Stocker, founder of online finance firm MarketInvoice, said he was dismayed at the move.
Wonga’s backers include Accel Partners, Balderton Capital, Greylock Partners and Oak Investment Partners.