Factoring – lender of last resort no more

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

1 thought on “Factoring – lender of last resort no more”

  1. Wonga has pledged to make loans available to firms within 15 minutes. The interest rate will start at 0.3 per cent a week, rising to two per cent a week for businesses with a poor credit record.

    Firms must pay an arrangement fee of between one and five per cent of the loan, which can be from £3,000 to £10,000, and there are penalties of £10 a time for missing a weekly payment.

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