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Wonga to increase business lending

Date Added: 11/03/2013  

Payday loan specialist Wonga has revealed it is continuing its expansion into business lending.

The firm announced that it is planning to raise its maximum loan amount from £15,000 to £30,000 in a bid to make its loans available to more small to medium-sized enterprises.

It noted that the higher amount will be offered in the coming weeks, but it will be keeping the maximum repayment term fixed at 52 weeks.

Speaking to the Daily Telegraph, Errol Damelin, the chief executive of Wonga, stated the company began offering loans of up to £15,000 to small firms to minimise its risks.

"Solving cash flow problems for small businesses is massively important for all of us," he said, adding: "They're the growth engine if we’re going to get out of a recession and that market is currently being starved of capital. We started in a more limited way, but we're feeling more comfortable now and the demand is there."

Wonga is yet to reveal data relating to how popular its business loans are, but Mr Damelin stated the company might do so in May, which will mark a year since it moved into the market.

Its loans are different to many of those on offer on the high street, as companies taking advantage of them have to repay the money on a weekly basis, rather than each month.

New figures released by the Bank of England (BoE) showed business lending dropped in the UK in the last three months of 2012, despite the Funding for Lending Scheme it launched in conjunction with the government.

Executive director for markets at the BoE Paul Fisher claimed it is too early to tell whether the programme is going to be a success, though figures showed lending was down £2.4 billion between October and December 2012.

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Posted by Miles Pritchard

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