AltFi P2P Loans Ever-More Popular With SMEs - Plus Guide to 7% ISA Transfers


We're pleased to report a new tranche of loans waiting on the wings to come up on site. We bring together small businesses looking for funds to grow together with individual lenders seeking a good return on the loan of their capital to carefully vetted borrowers. Peer-to-peer (P2P) lending is a key part of the alternative finance industry. P2P loans provide a viable alternative to bank loans. The move to this type of funding is growing, as London Loves Business reports:

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"Alternative finance holds the key to funding expansion for many British small businesses, as access to funds from traditional lenders remains restricted. According to a recent survey of 1,000 small business owners, almost one in three reported difficulties in securing business loans from banks, potentially halting their expansion plans. To help address this issue, Worldpay has announced a three year extension of its popular Business Finance scheme, aimed at helping over 300,000 British small businesses access alternative financing by enabling access to a "cash advance" based on their future credit and debit card sales. The scheme, launched in 2015 in partnership with Liberis, a leading provider of cash advances to small businesses, has already provided funding in excess of £50 million to UK SMEs. Under the scheme, funds can be made available to businesses in as little as 72 hours."

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We currently have three loan offerings live on the site. They are rated A+ or A – the two best risk ratings – and have a fixed return of 8 per cent or an indicative return (suggested bid rate in the auction) of the same amount. A gross yield of 8 per cent equates to a return of 7 per cent net of our fees. If you invest via our Innovative Finance Individual Savings Account (ISA – see below for a step-by-step guide to how this works) you will receive the income tax-free. All loans on site are eligible for inclusion in a Money&Co. ISA. If you do not have a Money&Co. ISA yet, please click on the ISA application tab on the Home page and fill in the form to create or transfer an existing ISA to us. You will need your National Insurance number. The ISA allowance for 2017/18 is £20,000 and you must commit funds by midnight on 5 April or you will lose your ISA allowance for this year. For full detail on the process, see below.

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A Process Guide To Innovative Finance ISA Investment

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:
  • Step 1 Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2 Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3 Buy loans in the loan market. Once you've put cash in your account it will sit there - and it won't earn interest until you?ve bought a piece of a loan. It's this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans - all loans on the Money&Co. site can be held in an IFISA - and your money will start earning tax-free interest.
The ISA allowance for 2018/19 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 an earlier article on security, access and yield. It's relatively easy to logon to our site and register to become a lender. But if that's all too new-fangled, you can call us on 020 3143 4004 or write to Money&Co., 58 Glentham Road, London SW13 9JJ. We'll then send you an ISA Brochure, and ISA Transfer Authority form (if you want to transfer monies from a Cash ISA) and a Freepost envelope. Then it's just a question of following your nose to get that income...

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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.