Factoring has had difficulty shaking off it’s reputation as the lender of last resort which it acquired in the late sixties and early seventies. It’s one of those soundbites that has carried on through the decades because everyone seems to have had a brother who’s wife’s cousin’s next door neighbour used factoring and when his company went bust he chose to blame the factoring company rather than his own poor management skills.
Well that title can now be well and truly buried thanks to the entrance into the commercial lending market of Wonga – yes, them of 4,200% APR fame.
Wonga will be offering loans to businesses of between £3,000 and £10,000 which will be available for terms of between one and 52 weeks. The cost, including a variable application fee and interest, will start at 0.3% a week and the loans will have to be repaid in weekly instalments.
The phrase “will start at 0.3% a week” sounds quite good but one has to wonder what realistic rates will actually be