Wonga raises $22.25 million

Short-term loans with expensive APR seems like a good business to get into during recession

Wonga, an Online provider of short-term cash advances, has raised $22.25 million in a new round of funding led by Accel Partners and Greylock Partners.  This Series B round, is a significant step up from a previous $6 million round.  Accel Partners is known to have backed Facebook.

Available in the U.K., Wonga answers the credit crunch offering very short term, like 30 days or less, flexible cash advances of up to £750 for approved users.  The entire process is done through its Website in which users can literally adjust sliding scales in relation to how much cash they need loaned and how long they would like to repay it in.   

Wonga’s annual percentage rates are extremely high – typically about 2689% APR.  Wonga argues the only reason the number appears so high is that the loans it offers are short term, flexible and transparent.  The company compares itself to other companies like video rentals, taxi cabs and hotels, instead of traditional credit card lenders.

Wonga says it has provided nearly 100,000 cash advances and is already profitable since its founding in 2007.  

Errol Damelin, CEO of Wonga stated on the future of the company, “We’ve built to scale and there is now huge scope for expansion and delivering even more value for our customers.”  Wonga would like to use this round of funding to expand its services across Europe and open up its short term loans to more potential customers.

Oh...and from the Wonga site:

Wonga: slang term for cash or money, used in the UK and especially in London (“A whole lotta wonga”). From the Romany word wanger (coal) - coal was sometimes used as a casual term for money in England in the 18th and 19th centuries.