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UK FinTech Sector Booms – Plus Loan Auction Latest

Things in the UK FinTech sector are good, and getting better – according to recent research showcased by our friends at The Fintech Times.

Dealroom, the data provider on startups, growth companies and tech ecosystems, has analysed findings for the UK’s Digital Economy Council that suggest the UK’s digital economy is now worth more than double that of Germany’s and almost five times larger than France and Sweden. In addition to this, the industry is now worth $1trillion in value, as the country’s tech sector becomes the third in the world to ever reach this landmark valuation. 

This rapid rise in the value of UK tech follows sustained investment in the digital tech sector over the past few years. The covid-19 pandemic, in particular, triggered a wave of tech adoption from digital health apps, to education platforms, video conferencing and eCommerce. The products and services that kept us connected at home have become key parts of our daily lives now, helping propel company valuations higher and the UK tech ecosystem into a new league.

Digital minister Chris Philp said: “Our tech industry has gone from strength to strength, overtaking the rest of Europe and entering the history books as the third country ever to reach this milestone. We’re working hard to make the UK the best place in the world to found, grow or float tech businesses – whether they’re early-stage startups or global innovators – ensuring they have the best talent, investment and regulation to thrive.

Loan Auction Latest

  • The end of the tax year is approaching, and we currently have five loan auctions on site.

All these loans can be held, up to £20,000, as Innovative Finance Individual Savings Accounts (IFISAs). IFISAs are explained in more detail below. Here’s the latest from the auction room:

  • Mar-Key has a credit rating of A+, a yield of 7 per cent and a term of two years. It is currently 27 per cent filled.
  • HTHL Ltd has a credit rating of A+, a yield of 7 per cent and a term of one years. It is currently 18 per cent filled.
  • Fleetwood Legal has a credit rating of A, a yield of 7 per cent and a term of one year. It is currently 31 per cent filled.
  • Bonnington Law has a credit rating of A, a yield of 7 per cent and a term of one year. It is currently 28 per cent filled.
  • Harris & Co. has a credit rating of A, a yield of 8 per cent and a term of one year. It is currently 43 per cent filled.
  • You can see detail on each by logging in and downloading the credit note.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £24 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.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

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:

  • 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 2020/21 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.

 



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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.