Here's what our CEO, Nicola Horlick, said about the two asset classes a little while ago on the Money&Co. site, and in CityA.M.:It's worth reminding readers of the difference between equity and debt crowdfunding – the loans that are offered on this site for example. Here, Money&Co. CEO, Nicola Horlick, explains the pluses and minuses in a recent column in CityA.M."The risks to individuals investing in startups are considerable. Fifty per cent of UK startups fail and the FCA has warned that individuals investing in them through an equity crowdfunding site have a high probability of losing all of their money. This is not true of debt sites like mine. Companies that borrow money via Money&Co. must have a minimum of three years' filed accounts and must have been profitable in their last year of operation.We take a first-ranking debenture over all of the assets of the company and any pre-existing secured debt must be discharged. We will allow a company to have a facility from an invoice discounter, however, as this is helpful to its cash flow. None of the companies that have borrowed via Money&Co. so far have missed a monthly repayment. It is inevitable that there will be some bad debts eventually, but we estimate that this will not exceed 1 per cent of monies lent."
Money&Co. Lenders' 8 Per Cent YieldOur lenders have achieved average returns of over 8 per cent on the more than £12 million facilitated by Money&Co. in the past four years. Our latest loan offering is A-rated and property-backed with a fixed-rate yield of 8 per cent, and a term of five years. It's proving popular, and is currently 32 per cent filled. All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (ISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income.
A Process Guide To Innovative Finance ISA InvestmentOur 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:
Risk: Security, Access, YieldDo 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.