To paraphrase a well-known song: nobody said it would be easy, but nobody said it would be this hard. No-one’s faulting the effort going into to reviving a crisis-hit economy – but planning and execution? That’s different.
You might have noticed a recent flare-up of SME anger on social media over the Bounce Back Loan Scheme (BBLS).
Complaints have ranged from the speed at which cash is being lent out, to new customers finding themselves struggling to be approved for the BBLS.
So what exactly is going on?
Having dug into the issue, there are two challenges facing not just fintechs and digital banks, but all lenders recently accredited in the government’s BBLS:
The first challenge is the lending limit placed on BBLS-accredited lenders…
Given the overwhelming demand for Bounce Back Loans, many banks have been forced to prioritise existing customers…
Historical Performance And IFISA Process Guide
That figure is the result of over £23 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.