While Wonga recently said they were going to try to get into the business lending game, it looks like small firms are rejecting payday loan companies en masse, according to newly released research findings.
While nobody’s about to say that high street banking is doing the small business community any favours – what with traditional credit sources drying up like the Sahara – but even firms that have been unable to secure credit from a traditional lender have been steering clear of Wonga or any other payday advance lender. Only 6 per cent of survey respondents said they would actually consider getting their business funds from a provider of short term loans, says market research firm BDRC Continental, adding that a full 91 per cent to completely reject payday lenders completely.
BDRC representative, James Dunleavy, spoke out on the new research findings, stating that it’s more than obvious that smaller firms have absolutely no desire whatsoever to become entangled in payday lending, even in the face of our currently stormy economic climate. It’s much more likely that these legal loan sharks have been sorely mistaken in estimating both the need and the appetite of small businesses for non-traditional funding at any cost, Mr Dunleavy added.
Shadow business secretary Chuka Umunna had nothing but invective for the banking system upon learning of Wonga’s controversial decision to make forays into the business lending sector earlier this month. The idea that business customers could be driven into the arms of a disreputable lender charging an annualised percentage rate of a high as 108 per cent doubtlessly turns the stomach of many Brits, but reports are emerging that small firms are not only encountering difficulties obtaining credit but are now experiencing their overdraft facilities being withdrawn as well as banks begin to get more than a bit wary of the mounting eurozone instability.