Challenger banks, as they were commonly known, are certainly developing their challenge to the mainstream. Witness the results of a new SME business service survey, as reported by our friends at Finextra.
The UK’s Starling Bank has shot straight to the top of charts in the latest rankings of business banking services by the Competition and Markets Authority.
The latest results from the bi-annual study conducted by BVA DMRC include Starling and Virgin Money as new entrants to the Business Current Accounts survey, in which approximately 1,200 customers a year are quizzed for each provider.
The results show how each bank is rated on overall quality of service and make it easier for people to compare offers. Since the survey’s introduction in August 2018, providers have been required to display their ranking prominently both in branch and on their websites and apps. The CMA also made it compulsory for all relevant banks to take part in the survey, so customers get the full picture.
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.