The dust thrown up by the Covid-19 virus hasn’t even begun to settle yet. Our friends at Crowdfundinsider report on a new platform set up to facilitate funding for companies that don’t qualify for the various government relief schemes. This is a separate issue from the scramble among altfi platforms to qualify for distributor status.
JustUs technology has reportedly been used to develop a new platform that will focus on assisting businesses that are not able to qualify for the UK government’s COVID-19 financial relief schemes.
A community-interest organization has been established by a number of Fintech companies, called ExcludedUK, in order to offer the Coronavirus Small Business Interruption Loan Scheme (SBILS).
The newly developed platform uses peer to peer (P2P) technology and software to assist SMEs. It allows small businesses to source and acquire their own funding from a network of lenders.
The alternative lending platform could potentially assist over 50,000 of the three million companies that are unable to meet requirements for obtaining funding from the UK government during the Coronavirus crisis.
Many of these businesses might include the recently self-employed or directors who pay themselves primarily in company dividends.
Historical Performance And IFISA Process Guide
That figure is the result of over £21 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.