Today, as the world hopes for the arrival of a truly effective Covid-19 vaccine, we bring two snippets of news.
British Business Investments, a Sheffield-based investment management firm, recently announced a £30 million commitment to support UK small businesses through Funding Circle’s UK SME Direct Lending Fund. It’s worth mentioning that Funding Circle is a small and medium enterprise (“SME”) loan platform.
The transactional value of the US Fintech market is expected to increase at a compounded annual growth rate (CAGR) of 8.6% over the forecast period of 2019-2024, according to a new report showcased by Crowdfundinsider.
“The report from Industry Research states that Fintech is beginning to transform the US financial sector, including the way that individuals and companies lend money, make investments, opt for loans, finance startups, and buy insurance. The report reveals that “on average, one out of three digitally active consumers uses two or more financial technology services.”
The report notes:
“As of 2018, the US accounts for 57% of the Fintech market. Consumers in the country have identified the key benefits that they can avail with Fintech innovation, such as convenience, security, simplicity, transparency, and personalization.”
Historical Performance And IFISA Process Guide
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.