Today, we offer a snapshot of our super-busy alternative-finance sector as the mainstream, in the form of investment funds and venture capital players, buys in yet again. Our friends at Altfi report a couple of significant deals:
Launched in February 2019, the firm is initially offering a prepaid debit card.
The new funding will support its ‘mobilisation phase’, its says, ahead of its launch in early 2022. It is also looking to grow its team as it works towards securing a full banking license.
Andrea de Gottardo, Kroo’s CEO, told AltFi that he doesn’t agree with some of the common consensus that the UK neo banking space is a crowded market.
And next up is the listed Schroders UK Public Private trust (SUPP), formerly Neil Woodford’s Patient Capital Trust, which has dipped its toe back in the fintech waters, investing $13.7m into digital banking service Revolut.
The private asset manager joins as a new investor alongside joint leads, and fellow first-time investors in Revolut, SoftBank Vision Fund 2 and Tiger Global Management.
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.