With the latest loan offer on site still at 21 per cent of full funding, this is a good time to remind visitors and registered lenders that lending to our carefully vetted borrowing companies is not a one-stage process. Investors who buy a fund or make a cash deposit into a building society account have done all the process they need to. With lending, depositing money is just the first part. After that, you have to choose a company and then deploy your capital.
A number of our registered lenders have deposited money, but not put it into loans. So here is our guide to the process of lending and getting those attractive returns (once you’ve acquainted yourself with the risks, of course).
The second tranche of the Fleetwood Legal £250,000 loan offering is now 23 per cent filled. The loan offering is rated A with a yield of 8 per cent and a 12-month term. Please note that ‘Fleetwood Legal’ is a code name for commercial reasons.
Money&Co. lenders have been funding legal claims since May 2019. Over that period, and despite the issues that affected the courts at the start of the pandemic, all of the money lent has been returned to our lenders with an average rate of interest of 7.85% before fees.Fleetwood Legal (FL) has an A rating from our credit committee and offers a yield of eight per cent over its one-year term. Below we offer an extract from our credit analysis. Readers wishing to see the full note and to subscribe to this offer must log in (or register if you are a first-time lender).
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.