Yet more on the migration of the alternative, digital banks into the mainstream.
Banking licences are hard to come by and take years of preparation but the UK’s digital banking space just got its latest fully-fledged member.
Bank North, which changed its name from B-North upon securing its licence, has been awarded a banking licence by the UK’s Prudential Regulation Authority (PRA), taking it one step closer to becoming a key player in the SME banking market.
The newly minted SME-focused digital bank hopes to become the UK’s first “truly regional bank of the modern era” and will open the doors to its first lending pod in Manchester later on this year before rolling out its services across the UK.
Bank North’s lending pods will be equipped with in-branch lending experts to help ensure that regional SMEs get the support and guidance that they need.
“Our model is groundbreaking and there has never been a more compelling backdrop to launch a new regional bank for the UK, as the country looks to build back better and recover from the ravages of the COVID-19 pandemic,” Jonathan Thompson, CEO and founder of Bank North, said.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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 2020/21 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.