Small businesses may get the helping hand they need

18 May

England’s own Wonga.com is a small, short term loan company. Borrowers can get up to 1,000 pounds of emergency relief for up to a month. Recently, the company announced that it intends to make loans available for small businesses as well, making money anywhere from 3,000 to 10,000 pounds ($4,800 to $16,200) available. The money could be used to satisfy any sort of short term need that small businesses are likely to come across that more well established companies have padding for.

While Wonga.com has come under fire for targeting customers in need with unfair credit interest terms, Wonga maintains that its interest rates are fair, and with a default rate of under 1%, it’s hard to say that Wonga is not a creditable lender. Due to the nature of the business, and that they don’t ask for a deposit, Wonga does not have the lending restrictions levied against banks many times their size, meaning that Wonga is in a unique position to provide much needed capital to businesses who just need a small push to make it to the next month.

It’s an unprecedented move that has come under a fair amount of criticism. Small term loans mean small businesses could mismanage themselves even more in to debt before bowing to an inevitable bankruptcy. The site is defamed as being misleading as well, and critics claim that the lending site will simply add to the growing global economics problems. Whether or not this site will encourage small business remains to be seen, but hopefully it will be a boon to the businesses that use it.

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