Our brand new service for business is based on existing Wonga principles and features totally flexible loan terms of between one week and a year, fee-free early repayment, clear pricing before you commit and 24/7 access.
We've already provided over four million short-term loans to individuals and we're now using our real-time decision technology to help entrepreneurs and organisations access urgent funds that can help them keep growing. We can provide cash injections of between £3,000 and £10,000 to small companies in less than an hour.
Small businesses are the backbone of the British economy. It will be agile entrepreneurs and small businesses leading us out of the tough economic times we find ourselves in. They are the ones coming up with new ideas, generating wealth and creating jobs. At Wonga we're entrepreneurs ourselves and we believe we can help by offering an alternative way of giving businesses quick access to credit to help overcome everyday challenges.
I have been involved in a number of start-ups and I know how important access to credit is in staying afloat, taking opportunities and growing. We intend to use our platform as a genuine alternative to help get Britain growing again.
Modern businesses are no longer 9-5 or Monday to Friday. Whether you're an individual consumer or a business owner, speed is of the essence if you have an urgent cash flow need. If you're a small retailer with an opportunity to buy some seriously discounted stock or you run a restaurant and your pizza oven's just packed in, you need cash quickly.
It won't be the perfect solution for every small business, but it will sit alongside traditional forms of funding such as overdrafts, bank loans and invoice discounting products. It gives businesses confidence that cash can be there if they need it, the online application process takes less than 15 minutes and we're removing the complexity and potentially biased human decision-making normally associated with applying for business credit.
The service will initially be available to limited liability companies and limited liability partnerships, which have been established for three years or more and have sales in excess of £20,000 per month. We plan to extend to sole traders and incubator-stage entrepreneurs in the future, as there's clearly a need for this product. We launched on Monday and we have already been inundated with applications.
We aim to offer a fast, flexible way of accessing these funds. A time consuming application process is the last thing a business needs in these circumstances and we offer a competitively priced alternative to traditional products. Small business owners are savvy people who can judge value for themselves and we're completely transparent about the cost, so they can easily make that call.
The cost of the loans, including a variable application fee and interest, will be set according to Wonga's risk-assessment technology, with weekly interest of between 0.3% and 2%. On a per-£1,000 basis, that equates to around £3 - £20 per week. As ever, a clear cost of repayment will be calculated for approved applicants before they commit.
Take the example of a £6,000 loan with a weekly interest rate of 0.8%. If a business borrows over 12 weeks they will have total interest payments of £576, alongside a £120 application fee. That gives a total cost of £558 per week and a total repayment of £6,696.
We believe we've priced the service to make it value for money while also taking into account the risk we are taking.
We'll be using our technology platform to make the same, selective lending decisions that we make for consumer applications and we are lending our own money, so we have nothing to gain from helping a business that can't afford the loan they're asking for.
For more information about Wonga for business click here, www.wongabusiness.com.