Wonga, which specialises in short-term personal loans, will now hand cash-strapped firms between £3,000 and £10,000 for up to a year after a 15-minute application reports The Telegraph.
The loans, which it hailed as a “new way [to] smooth out financial bumps”, will start at 16.6 per get APR and rise sharply to 180 per cent APR for customers with poorer credit ratings.
Rival lenders accused the company of “bottom feeding”, and “predatory” behaviour. “Wonga is targeting struggling micro-businesses,” said Anil Stocker, founder of rival loan company MarketInvoice.
Lee Manning, president of insolvency trade body R3, said firms would only want the kind of service Wonga is offering as a “last resort”.
Stella Creasy, Labour MP for Walthamstow, added that the Government’s Project Merlin, which aimed to ease credit facilities by forcing banks to show the “capacity and willingness” to lend £190bn each year, had not delivered on its aims, leaving companies “desperate to stay afloat”.
“We have seen what exorbitant payday loans have done to family finances,” she said. “God knows what they are going to do for business finances.”