Time to stand firm, amid all the mayhem. Our commitment to continue to fund carefully vetted SMEs that meet our investment criteria is just as strong as ever.
Meanwhile, here’s the latest in the SME lending news cycle. From our friends at P2P Finance News.
CONFIDENCE among small- and medium-sized enterprises (SMEs) hit a record low in the second quarter of 2019, research claims.
CYBG’s SME Health Check Index – a quarterly measure of performance and outlook for UK small businesses – fell by 6.9 points to 41.9 in the second quarter of 2019.
This is the lowest score since the data collection began in 2014 and there was also a 6.9 point fall between the first and second quarter – the largest quarterly drop in almost two years.
Woodville, rated A, for £200,000 with an 8 per cent fixed yield, is 67 per cent funded at the time of writing. DK Tuning is a B+ loan of £280,000 with a five-year term and an indicative interest rate of 10 per cent. It’s 13 per cent filled at the time of writing.
The loan funds will be used for an acquisition. See below an excerpt of the borrower’s representations as it seeks funds. As ever, we’ve done due diligence, but cannot warrant the accuracy of the statements. For more detail. CLICK HERE.
The performance of DK Tuning has been strong, with turnover doubling every year so far. Gross margins are stable at around 50%, and crucially we have enough staff and resources already to absorb the target business. The combined turnover of DK Tuning and the target company will be over 1.1 million on day one, and we predict that this will rise steadily as our better customer service model and improved rate of sales per sub-dealer take effect. There should be a slight uplift in gross margins because of the integration benefits.
Historical Performance And IFISA Process Guide
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.
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.