Money&Co. Ups Its Security Lending Game – Plus Loan Latest

The platform lending sector, or peer-to-peer (P2P) lending sector, has had a tough year. There have been platform failures, and the toxicity of mini-bond failures (unrelated to P2P – but seen by some as linked) has generated much negative publicity.

Against that background, Money&Co. has taken the decision not to facilitate loans without tangible security from a borrower.  The company has also decided to develop three specific lending verticals:

  • Litigation finance
  • Property-backed lending
  • Lending to music artists with security being taken over music rightsBelow is a short extract from a recent letter circulated to Money&Co. shareholders.

During 2019, we lent £1.6m to two firms of solicitors to finance small claims relating to road traffic accidents and housing defects.  We agreed that we would only lend against cases protected by an After the Event insurance policy, which would payout if the claim failed which meant that our lenders were effectively getting capital protection.  The average length of time that it takes to settle a road traffic accident case is 6 months and the average time taken to settle a housing defect case is 9 months.  We recently secured an investment of £1m from a family office to finance more claims and we closed this on 30 January…  The family office will potentially lend [much more if it likes the performance of these loans].
We have continued to build our property-backed loan book and have lent a total of £6.4m to two companies in the property sector. [Unlike some other platforms] we do not allow property companies to roll up interest.

Loan Offer Latest

Yes You Can, rated B, for £30,000 with an 11 per cent fixed yield, is currently 52 per cent subscribed. Project Rhapsody, A+ rated with a yield of 8 per cent over three years, is currently 41 per cent funded.

Historical Performance And IFISA Process Guide

  • 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 over £20 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.

  • Money&Co. has been lending for over 5 years and has only had one bad debt so far, representing a bad debt rate of 0.03 per cent per annum.

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 2019/20 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.


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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.