Hello and welcome to what we hope and expect will be a prosperous 2019 for our lenders and for Money&Co.
Regular visitors to the site will have noticed that we have shifted the focus of our offering – which remains at its core the bringing together of small companies seeking funds to grow with individuals seeking good returns on capital. The emphasis is now on asset-backed and property-backed loan offerings.
The thinking behind this move is simple: More and more investors are putting P2P loans in Innovative Finance ISAs and so there is a need to preserve capital.
Currently, loans are property backed, but we are also looking to include loans backed by other assets (so a loan to a dentist to buy a dental suite may be secured on the dental suite or a loan to a transportation company to purchase lorries may be secured on the lorries).
This move is also prudential. It is driven by concern about the UK economy. We believe that economic growth is slowing and that we could be pushed into recession if Brexit goes wrong, so we want as much security as possible to protect our lenders.
That said, the outlook is bright for property-backed loan offerings: We take a conservative loan-to-value approach, and the yield on such loans is typically attractive, with an eight per cent gross return not unusual.
Money&Co. is rapidly approaching a new landmark in loan volumes facilitated, with a new link-up set to boost volume further in the pipeline. Watch this space…
A Process Guide To Innovative Finance ISA Investment
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 IFISA holds the peer-to-peer (P2P) business loans that Money&Co. facilitates. But how do you do it?
Here’s our guide to the process:
The ISA allowance for 2018/19 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.