We’re truly sorry to Mention it. You know, the B-word… But our friends at P2P Finance News rang our CEO and asked for commentary. See below.
MONEY&CO. founder Nicola Horlick has warned that a no-deal Brexit could hurt peer-to-peer lending platforms which rely on asset-backed investments.
Horlick, who earned the moniker ‘City superwoman’ while juggling a successful investment management career and family life, told Peer2Peer Finance News that she was “very anxious” about Brexit.
She expressed particular concerns about the impact that a no-deal EU exit could have on the UK’s growing property-backed and asset-backed lending market.
“Because we look for assets, we have a heavy weighting in our capital loans in the engineering sector,” Horlick said. “This manufacturing and engineering sectors make up something like 10-11 per cent of the UKs GDP, but around 40 per cent of our loans are in manufacturing because that’s where the assets are.”
Many P2P platforms offer asset-backed lending, with assets ranging from property, leaseholds and collectable assets, to machinery or warehouse stock.
Horlick added that uncertainty over the future of import and export duty could do further damage to those businesses that are in the manufacturing sector, placing a series of P2P loans at risk of default.
Money&Co. has facilitated just under £15 million in P2P loans since 2014. As we write, the latest loan offering is set to follow shortly.
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:
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.