Is Wonga for business a brilliant product or a rip off?

We have had decades of cheap or relatively cheap money. We have had a boom and a bust. In our view money is no longer a cheap or abundant product. And this could last 10 years or more.

In 1983 I had to wait 9 months to get on the list of applicants for a mortgage at my local building society, during which time I had to lodge my pay slips religiously every month. Then 4 months later the magic day came, yes you can have a mortgage!

Should we get used to rationed mortgages, more expensive loans and credit cards? Yes, and more expensive business loans and overdrafts.

Turning to the title of this blog, Wonga has a business product which is in my mind excellent. When visiting their site www.wongabusiness.com you simply enter how much money your company wants up to £15,000 and how long you want to take to pay it back - up to maximum of one year. A slider tool tells you how much you pay. Brilliantly simple.

Of course the whingeing journos in the Daily Mail bleat about 4200% APR for personal loans, which is categorically rubbish. On this page you can see the cost of the fees and interest and you get offered a simple monthly repayment. How easy is that? If you pay that back you can borrow more. Yes woe betide if you don't because personal guarantees (PGs) apply.

Compared to credit cards and credit card cheques (remember them) that I used to start some of my early business ventures, there is not a great deal of difference in cost. For example £15,000 will cost £19,350 to repay, a rate of near 30%.

But you know what? The monthly repayment is shown as 52 weekly repayments of £372.12. So that will seem affordable to many.

Remember a personal credit card is taken out at your personal risk, so what is the difference really to a PG for Wonga?

Whilst many people think the market is dysfunctional in lending to SME businesses I see more products like this coming to market for small companies whilst the old dinosaur banks concentrate on capital adequacy and compliance, not providing banking to small businesses.

How many small businesses will use this to cover emergency VAT payments, or meet rent or wages in a short term cashflow crisis? A lot is my guess.