More movement in the open-banking sector. The high street and the financial-services sector will look radically different in the summer, when we hope some semblance of normality returns. Our friends at Finextra carry the story.
Atom Bank has signed a deal with Plaid to introduce Open Banking and payment initiation services to small business customers.
The first iteration of the technology will begin with offering business owners a streamlined loan application journey and speedier decisions.
Atom Bank has been a previous recipient of a £10 million grant from the Banking Competition Remedies Board to inject competition into the small business banking market. It is also one of a small number of banks to offer secured loans to new, and existing, customers through the Government-backed Coronavirus Business Interruption Loan Scheme (CBILS).
Initially Plaid will be working with Atom as part of the bank’s secured business lending process for underwriting both CBILS and non-CBILS applications. The app-only bank will also be using Plaid’s Payment Initiation capabilities to streamline fee payments.
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.