The FinTech sector is undoubtedly booming. With buoyant funding levels, new product launches and acquisitions aplenty, our friends at Finextra report the latest.
With VC investment in the UK’s financial technology sector soaring, Tech Nation has unveiled the 30 scaleups selected to participate in the fourth cohort of its fintech programme.
The six-month government-backed programme is designed to support fintech and insurtech companies in the UK. Participants get access to networking events with key stakeholders, peer-to-peer meetups, and insights sessions delivered by established fintech entrepreneurs, investors and partners.
The 30 firms span 11 fintech subsectors, from payments, to proptech to SME financing. London dominates, home to 18 of the participants, while 30% have at least one female founder. The majority of the companies are at seed stage with others at pre-seed or series A, and the group has already collectively raised £128 million and employs more than 700 people.
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.