Regular visitors to this News site will know that we here at Money&Co. had been running the business along conservative lines for several years – way before the advent of Covid-19. Our friends at P2P Finance News report the way our CEO Nicola Horlick made the call.
Money&Co chief Nicola Horlick has said that the platform was lending with caution even before Covid-19, due to concerns of a Brexit-induced economic downturn.
The City superwoman said the peer-to-peer business lender had decided purely to offer secured loans even before the pandemic hit, focussing on music loans and litigation finance.
Money&Co’s music loans are secured on music rights. Its litigation loans are secured on the legal case, with an insurance policy to cover costs if the claimant does not win the case.
“We didn’t know there would be a pandemic, but we thought there would be a very sluggish economy and potentially a recession, so we were already prepared to an extent,” Horlick said.
“For the small- and medium-sized enterprises (SMEs) we’ve already lent to, we’ve extended their loans or made them interest-only. “We do everything we can to help our borrowers but at this moment we don’t want to take on new SME borrowers because of what could happen to their businesses.”
Horlick has argued that a V-shaped recovery will be impossible because many businesses will never reopen.
She said the government needs to be proactive to facilitate a recovery.
Historical Performance And IFISA Process Guide
That figure is the result of over £21 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 2019/20 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.