You might think ethical screening would simply be a part of due diligence. If a ;ender genuinely knows the client, one assumes that the ins and outs of a borrower’s business model – including the moral/ecological implications of the operation – become apparent). Lenders on this site can be sure we’ve looked hard at the efficacy and the ethical nature of every borrower’s business model. Maybe it’s just a question of emphasis.
Funding Options is to debut the UK’s first green finance marketplace for small businesses, helping them to finance investments in ‘green assets’ like solar panels.
Lenders including Swishfund and Cambridge & Counties Bank are joining Funding Option’s green lending panel to support those businesses making green investments.
“As the green finance market for SMEs matures, there will be greater opportunities to support a wider range of businesses by offering lower product pricing to ‘green’ SMEs in order to encourage them to become more sustainable,” said Funding Options CEO Simon Cureton, announcing the marketplace.
“Our own wider sustainability policy and commitment is to play a leading role helping to drive environmental and social governance in the alternative lending market, while at the same time promoting a broader choice of competitive green finance options for our customers.”
Lenders are also increasingly looking to be matched with borrowers with strong environmental credentials, those which are operating low or zero-carbon business models.
This demand is so that they can achieve ESG compliance, which asset and fund managers are increasingly considering when offering credit lines to lenders.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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 2020/21 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.