We’ve been reporting regularly on the Coronavirus Business Interruption Loan Scheme (CBILS). We see CBILS as a great idea whose execution is, at best, uneven.
Our friends at P2P Finance News run a piece on the Coronavirus lending initiative, leading with a quote from Money&Co. CEO, Nicola Horlick. See an excerpt from the article below.
Peer-to-peer lenders are calling for further improvements to the coronavirus business interruption loan scheme (CBILS), as it emerged that just 6,020 loans have been made to date.
Fresh data from UK Finance revealed that lenders have received 28,460 formal applications to the scheme from businesses, of which just 6,020 have been approved, totalling £1.15bn.
The government-backed emergency loans are being channelled through the British Business Bank to accredited lenders. But the state-owned development bank has come under fire for the slow pace of approvals.
Yesterday the British Business Bank approved four new lenders to deliver CBILS, but has yet to accept any P2P platforms for the scheme.
“The British Business Bank really needs to get their act together and start making the scheme more dynamic, ensuring the money gets to these companies as fast as possible,” said Nicola Horlick, chief executive of Money&Co.
“The government needs to be faster approving lenders like us, we’re very keen to help, as are other platforms I imagine. We talk to small businesses and can act much faster than banks.”
Historical Performance And IFISA Process Guide
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.
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 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.