Whether a summer of discontent lies ahead or not, the immediate past has been pretty rosy for the small-business sector that Money&Co. and its cohorts serve.
The British Business Bank has shared the results of its annual Small Business Equity Tracker and the numbers for 2021 appear pretty strong. The Equity Tracker uses data from Beauhurst on publicly announced equity deals into UK SMEs.
According to the Bank, equity investments in UK SMEs jumped by 88% in 2021 – clocking in at around £18 billion. The momentum continued in Q1 of 2022 as equity investment registered £7.6 billion – the highest recorded in a single quarter. Investment in UK tech firms rose by £4.1 billion the year prior to £8.2 billion for 2021.
Loan Offer Latest
A loan offer from Harris & Co., a borrower that operates in the litigation claim sector, is available on site. The loan is risk-rated A by our credit committee. It has a gross yield of eight per cent, for a fixed term of 12 months. The loan offer is currently 15 per cent subscribed, and will close when filled.
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.