We have asked in these News pages whether the open door to open banking might lead to an empty room. The room is definitely not empty, as the queue to get in lengthens steadily. Our friends at AltFi report the latest:
Trade Ledger, an open banking fintech helping banks and alternative lenders make credit decisions, has raised a £13.5m series A funding round.
The round was led by Point72 Ventures, with Foundation Capital, Court Lorenzini, founder of DocuSign, Hambro Perks, and other existing investors also taking part.
Trade Ledger, founded in 2016, last raised money in 2019 with a £1.5m seed round. With the new funding, the lending-as-a-service platform is looking to grow out its sales, marketing and customer delivery teams.
Martin McCann, CEO of Trade Ledger, said: “This new investment will enable us to triple our customer base during 2021. Adoption of our technology is critical for the post-pandemic recapitalisation of the economy and we are driving growth as fast as our capital allows, to be able to support this critical economic need, particularly for SMEs. New digital solutions based on real-time business data are the only way to address it.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 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.