Financial and social change are galloping towards us, hand in hand. While the focus in the UK may be the cost of living and the day-to-day worries of just getting by, the micro-universe of financial Technology is a very distant other side of the coin. With the constant stream of deal announcements, there’s no doubt that the whizz kids of Fintech are not too concerned about the size of the gas bill.
Revenue-based business finance provider Bloom has secured £300 million in a funding round led by Credo Capital Partners and funds managed by Fortress Investment Group
Led by James Hickson, the ex-head of Morgan Stanley’s Fintech Enterprise and a former fintech investment advisor to Credo Capital Partners, Bloom specialises in providing capital to growth businesses that operate predominantly online.
Founded during the global pandemic in Luxembourg, the Bloom product is based on a flexible pricing and deployment model that combines the best features of a revolving credit product, charging customers for only what they use with the predictability and transparency of cost that comes with fixed fee revenue-based lending.
“We are not another revenue-based lender,” says Hickson. “We estimate that ecommerce merchants have incurred £125-£200 million in excess fees based on the current pricing status quo. That’s money that could have been used for more stock, increased ad spend, or customer incentives. We saw an opportunity to innovate rather than simply join the herd. So we did.
Historical Performance And IFISA Process Guide
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.
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 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.