We are pleased to see some evidence that the small businesses we’re all trying to help in the peer-to-peer (P2P) sector are increasingly aware of he alternative funding sources that we’re offering. Our friends at AltFi report on a recent survey.
Nearly half of the UK’s small and medium-sized businesses, 49%, are poised to turn away from big traditional banks when it comes to choosing financial services.
Instead, awareness of peer-to-peer marketplaces and digital banks are on the rise, with 66% of SMEs being aware of other options available to them.
The figures, reported by marketplace lender Growth Street who surveyed 2,000 SMEs, paint a particularly positive picture for alternative lenders, which are now being considered by 35% of small businesses (up from 30% in 2018).
More disappointingly for the industry, 51% of directors and employees at SMEs said they would still approach their bank first when thinking about finance, a figure that had actually grown from 45% last year.
“Nevertheless, our survey has exposed just how far many respondents see the banks as the first port of call. This is not necessarily welcome news for challenger brands.”
8% Yield Loan – Latest
The latest loan from property-backed Seascape is proving popular. This A-rated tranche yields 8 per cent gross, at a fixed rate for five years. As is the case with earlier tranches of credit, we have used our best efforts to ensure the truth of the assertions made, but cannot warrant their absolute accuracy. Further detail is available to logged-in members.
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.