Deadline Looms For A-Rated 8% Loan Offer - Plus FinTech Borrower Latest
The latest, A-rated loan offer on site is closing in four days. It is 63 per cent funded with a current average gross yield of 9.2 per cent. The indicative yield, ie the yield recommended by our credit committee, is 8 per cent. As the loan auction deadline nears, experience tells us that cheaper offers of credit will knock out the more expensive ones.
The yield on our peer-to-peer (P2P) loans is even more attractive if the loans are held via our Innovative Finance Individual Savings Account (ISA). See our guide, below, as to how you can receive income from Money&Co. loans completely tax-free.
FinTech Borrower Update
The Engineer reports increased uptake from SME borrowers, the companies that Money&Co. lenders support: An improving economy and market innovation has helped recapitalise British industry and 10-years on the situation is much healthier. The body UK Finance finds that eight out of ten business loan applications by SMEs are successful and its latest SME Finance Monitor, a survey of around 4,500 SMEs, found an increase in demand for finance in the final quarter of 2017. Liquidity is back and today access to finance is characterised by innovation and choice.
In addition to the big high street banks and challengers such as Aldermore and Metro Bank, SMEs can now also turn to a clutch of sources known as "alternative finance" to raise money. This includes financial technology, or fintech, platforms that use digital technologies including blockchain and APIs (application programming interface) to source capital in a peer-to-peer model.
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.