A Look At P2P Performance In Stormy Times – Plus Loan Latest

The performance of the peer-to-peer (P2P) sector in difficult times is a frequently visited topic. P2P Finance News is the latest visitor to this space.

With credit conditions getting tougher, one of the ‘big three’ peer-to-peer lending platforms, Funding Circle, recently lowered its annual return projections.

It should be noted that the ‘big three’ platforms have different business models and lending criteria so should not be compared on rates alone, but how do Funding Circle’s returns stack up for any new investor looking at the biggest brands in the market?

Funding Circle recently cut projected returns on its Conservative and Balanced products.

Its Conservative product targets 4.9 to 5.2 per cent, from between five and 5.5 per cent previously.

This product offers exposure to loans made only to creditworthy businesses deemed lower risk.

Balanced, which also lends to higher risk businesses and has a higher estimated bad debt rate, now targets returns of 5.5 – 6.5 per cent, down from the previous six to seven per cent.

In contrast, P2P consumer lender Zopa offers returns of 4.5 per cent in its less risky Core product, while Zopa Plus invests in higher-risk loans for a higher estimated return of 5.2 per cent.

Loan Offer Latest

Money&Co. has grown relatively slowly (and received some criticism for this) since it began facilitating loans in 2014 – Just under £15 million facilitated. A major reason for that is the conservative approach to credit analysis and company vetting that we take, For now, at least, enough said. As we write, the latest loan offering is 81 per cent subscribed. The offer is property-backed and offers a fixed rate of 8 per cent over its five-year term.

A Process Guide To Innovative Finance ISA Investment

Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). That figure is the result of almost £15 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:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

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.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.