9th May 2012
To be clear from the outset, we have worked with a pay day lender in the past and spoke to Wonga when we heard via the industry gossip mag that they were looking for an agency.
Hats off to Wonga.com. They have been very savvy in the timing of their announcement that they are moving into the small business B2B lending arena.
They announced it on a traditionally slow news day, a Bank Holiday Monday and by the looks of it worked hard to get the Press Association to run the story that then triggered a mass pick up across the board.
As soon as I mentioned the story on Twitter I got a few comments about what they were doing and even a few DM's saying I should not be promoting the story.
As I have always said, payday lenders play a role in the money lending world, regardless of peoples thoughts on them. Wonga.com's move into the SME/B2B market is an interesting one. The Wonga rates appear to be far lower than the screaming Daily Mail's 4200% headline suggests, the examples being far lower at around the 0.8% rate (weekly) - according to the Guardian.
The angle that Wonga.com used to launch their SME loans is definitely an interesting one, referencing the fact that companies sometimes need bridging loans until a large invoice or more traditional funding comes through. This is where it could get sticky, especially if it is the latter.
If a company has already successfully applied for funding or a loan via a traditional lending house then, in theory, the Wonga bridging loan could make sense. If the company has not made the application for a loan, applies for Wonga (one credit check) and then tries for the more traditional loan (second credit check), the fact there have been two credit checks so close together could result in a slightly damaged credit rating (or appearance at least) and trigger loan decline.
With the Federation of Small Businesses recently reporting that 26% of small business owners are having to use credit cards to keep their business afloat, it is a certainty that Wonga.com could compete with these interest rates, should they so wish, and play a role in this market place.
All eyes will be on the average interest rates that they deploy, but as I said at the outset, it is a fantastic example of a well executed public relations campaign.