Wonga announces lending shift to small businesses

Ever ready to lend a helping hand to anybody who is hard up for cash, the well known instant cash loan company, Wonga, has just launched a new initiative to make its loans available to small businesses – or SMEs – as well as its ordinary customers.

The plan to lend to businesses comes about for exactly the same reason as short term loans have become so successful elsewhere – the difficulty in accessing credit from the ordinary short term lenders like banks.

Wonga began its business initiative on May Bank Holiday Monday and is making loans available between three to ten thousand pounds at interest rates of 0.3% per day.

The CEO of Wonga, Errol Damelin, is pretty enthusiastic about his company’s decision to penetrate the SME loans market and was reported saying that they will provide the same “fast, flexible and short term” system as is available to individuals.

Loans to small and medium sized businesses will be accessible online like ordinary short term loans and the same convenient and fast method will be operating too.

Not everybody is too happy about the drive to provide loans for SMEs. Perhaps predictably, instant cash loan warrior Stella Creasy who is still waiting for her day in parliament to see how her instant cash loan interest cap fairs is quite incensed about Wonga’s new initiative.

She was reported saying that the availability of short term loans for SMEs is symptomatic of the lack of help that the British government is giving to the small business community. She pointed out that the government’s own initiative, Project Merlin, has been a flop and business insolvencies have risen by some ten percent this year alone.

Ms Creasy said that the idea that short term loans could actually “help” small businesses who were struggling to survive “beggared belief”.

The lack of easy credit is certainly an impediment for many small businesses in cash strapped Britain at present. Lending to small businesses dropped by a whopping four billion pounds in February alone this year. This was the largest drop in two years according to the Bank of England’s own statistics.

A spokesperson from the Royal Bank of Scotland said that he could not see any sudden change in the amount of cash lent to small businesses in the near future and suggested that businesses would not be advised to take on new debt when the economy was so stagnant.

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