I see that Wonga for Business has now entered the UK market and is offering loans to small businesses.

Initially this seems like a good option for retailers in need of a quick cash fix considering how tricky it is to get anything from banks at the moment.

But if you look at the small print you see that a business borrowing the maximum amount of £10,000 over the maximum term of a year would be faced with costs of nearly £11,000 – more than the original loan. And currently this is not regulated by the Financial Services Authority.

Wonga’s John Moorwood spoke to me this week and said the company is not taking advantage of hard up firms and is really aimed at those with an immediate cash flow problem rather than those needing a long term loan.

Perhaps you have to accept that the guys at Wonga are savvy businessmen just taking advantage of the market economy. But what Wonga’s entrance into the world of business loans really tells us is that banks and traditional lending systems are simply broken.

The government’s Enterprise Finance Guarantee scheme is not doing the job it is supposed to and banks are not lending as they should. Lack of funds for investment are holding independent retailers back. Now Chancellor George Osborne needs to show some bottle, flex his muscles and make the banks lend more by using either a juicier carrot or a bigger stick. If we’re going to get the economy back on track it’s got to be led by our businesses and they need all the cash they can get in order to build and look to the future.