Money&Co. and other peer-to-peer (P2P) crowdfunding platforms have long been lobbying the UK government for a separate, third category of tax-free savings plan for individuals. We have been arguing, along with others in our sub-sector of crowdfunding, that in addition to the existing cash and stocks-and-shares versions of the New Individual Savings Account (NISA), which allows individuals to commit more than £15,000, there should be a separate P2P version. In short, we believe P2P loans should be treated as a new and separate asset class that is less volatile, but also less liquid, than shares or bonds.
What we want is a vehicle that can include our loans – current gross yield achieved by our lenders is 8.2 per cent – and allow lenders to take their income tax-free. Creating a P2P loans NISA would help transform the savings and investment scene.
Judith Evans reports from a source in today’s Financial Times (subscription required) that P2P lending providers may have to impose temporary limits on new investment when the sector becomes eligible for the NISA wrapper.
This statement comes as surveys continue to indicate that about half of Britons have still not heard of the sector, despite the fact that it processed more than £1 billion last year. Come the creation of a P2P loan NISA, that is likely to change, resulting in a potential influx of new lenders, says the article.
*** If one is to judge by the rate of growth, sooner or later our part of the financial universe will be too big to ignore. The European online alternative finance market grew by 144 per cent last year, and could reach Euros 7 billion in 2015, according to the recent report produced by the Centre for Alternative Finance at University of Cambridge Judge Business School and professional services organisation EY (formerly Ernst & Young), which we reported on yesterday.
According to the Cambridge Judge website, the report includes “input from 14 key national or regional industry associations, as well as 255 leading platforms in Europe, covering an estimated 85-90 per cent of Europe’s online alternative finance market. While previous studies have charted alternative finance in the UK, this report is the first to cover other European countries in detail.
“Seen until recently as a niche activity, online alternative finance, including equity-based crowdfunding and peer-to-peer business lending, has become a vital and increasingly commonplace source of essential funding for many businesses throughout Europe, says the report.”
Risk
*** Money&Co. is a peer-to-peer (P2P) business lender. We bring individual lenders together with carefully vetted borrower companies via our internet platform, a mechanism known as crowdfunding. Marketplace lending carries risk with it. Please see our Home page and Frequently Asked Questions before committing capital.