The Covid cashflow mini-crisis for SMEs is being reported, albeit in a piecemeal way. Our friends at UKTech News bring us the latest on SME cash flow issues, as researched by the news outlet and Lloyds Commercial banking:
Joint research conducted by Lloyds Bank Commercial Banking and UK Tech News has delved into how the country’s technology SMEs have been affected by the pandemic – more than 100 business leaders within UK tech companies were surveyed in the first two weeks of August 2020.
The study found 42% of UK tech firms have been unable to sell to their usual customer-base since the beginning of the lockdown period in late March. Indeed, in the midst of the pandemic, 48% said they have had to pivot their product or service to ensure it better suited the current climate.
More positively, 66% of the decision-makers surveyed felt that their tech firm had responded “well” or “very well” to the challenges brought about by COVID-19. Further, 59% of those companies who have pivoted their business model in recent months said the changes they have made will be implemented for the long-term, rather than reverting to their pre-pandemic state.
However, the research from Lloyds Bank Commercial Banking and UK Tech News also underlined how prominent cashflow issues have become this year. Just over half (55%) of UK technology businesses have experienced cashflow issues since the imposition of lockdown measures.
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.
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.