Payday lender launches small business loans service

By Joel Stanier

Payday loan provider Wonga.com has launched a new service that could give small businesses access to loans almost as quickly as its consumer loan customers.

The service will provide loans of between £3,000 and £10,000 to small businesses with a wait of as little as 15 minutes. Interest rates will start from around 17% APR - higher than most bank loans, but significantly lower than the 4,214% typical APR offered to its payday loans customers.

However, as with its payday loans, Wonga insists that measuring the APR is inappropriate, as the business loans are intended to be short term. The interest rates on a week-by-week basis start at just 0.3%, and the loans are repaid in weekly instalments.

Errol Damelin, founder and chief executive of Wonga, said: "All our research and speaking to other entrepreneurs tells us that small business lending is broken and we intend to use our platform to offer a real alternative."

He added: "Money will be in approved firms' account as fast as their banks will allow, typically between 15 minutes and 24 hours, although we'll only be helping companies that our technology identifies as being able to afford the loan they are applying."

Tags: loans, payday loans, Wonga, busines loans, business, business lending, interest rates, short term loans

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