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The high-cost lender Wonga is launching a business loans service, promising to make funds available within 15 minutes of an application. Loans of £3,000 to £10,000 will be available for terms of between one and 52 weeks. The cost, including a variable application fee and interest, starts at 0.3% a week and the loans must be repaid in weekly instalments. The firm has been heavily criticised for lending to individuals at an APR of 4,214%, but claims business loan rates will start at 17% APR. Wonga said its short-term loans were different from those provided by banks, and were expected to sit alongside traditional bank overdrafts, providing alternative or additional funding. Peter Ewen, managing director of ABN AMRO Commercial Finance and chairman of the International Factors Group, said: “The knee-jerk reaction for any business going through a difficult period is to secure “Wonga has suggested that its loans should sit alongside more traditional forms of funding. Yes, businesses that are seeking “Today’s business “In this difficult economic climate, increased SME funding options are always welcome but businesses need to take a sound, considered approach to lending to make sure that they can go on, and grow, with confidence. “Wonga hopes to fill a gap in the funding market that may not even be there. Evidence suggests that businesses are wary of seeking additional borrowing and that it is demand rather than supply that has reduced. In that case, time will tell whether this new offering from Wonga will have much of an impact.” Other Business Money News
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