By now you will have heard that Wonga has gone into administration. But you may not have known that it served as a resource for a high number of small businesses – we remember a statistic from a few years ago which said that 20% of small businesses had applied for a payday loan.
That so many small businesses felt the need to apply for high-interest short term loans, represents a failure of the market to match the right lenders to the right businesses. Banks do not always make it easy for clients, and do not have the capability to properly understand each individual business’ requirements. And small business owners don’t always know where to go.
“We’ve never had to introduce a client to Wonga, or a similar payday loan company”, said Henry Ejdelbaum, Managing Director of ASC Finance for Business. “Why? Because there are usually other lenders in the marketplace which provide finance at sensible rates. We’ve always found better solutions for our clients. And if there aren’t, the high cost short-term loan option, such as Wonga, might not actually be the right finance in the long-term”