Big And Beautiful Or Small And Sticky? P2P Needs Small Investors


Providers of financial services like "sticky" money, capital that stays once it's arrived. The fact is that small investors and savers, often criticised for "inertia", are slow to action. Their money, generally speaking, is sticky.At Money&Co. we are committed to keeping the crowd, in the form of the small investor, in crowdfunding. The stickiness of the money is an ancillary issue for us. The real point here is that we started out with the mission of bringing individual investors looking for a good return on capital together with small businesses seeking funds to grow.Below we offer news snippets that deal with institutional commitment (or otherwise) to the peer-to-peer (P2P) sector.

The London-based consumer lending platform landed the forward flow funding transaction from the New York investment bank, to continue to fund online loans to consumers in minutes using machine learning technology.Lendable chief capital officer Rory McHugh said: "We believe Goldman Sachs and the Luxembourg fund we are launching later in the summer will perfectly complement our existing funding partners as we continue to see significant opportunities for growth."

Another report, from P2P Finance News, shows institutional involvement in a potentially less favourable light.The Swedish peer-to-peer lender became one of the sector's first high-profile failures when it went into administration four years ago, amid allegations of mismanagement.

Loan Latest 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). New loans are expected to land on site soon.
That figure is the result of over £17 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 one bad debt so far, representing a bad debt rate of 0.04 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 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.

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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.