One of our neighbours in the platform lending sector, Thin Cats, is closing the door retail lenders. AltFi reports:
ThinCats is closing its retail peer-to-peer lending platform, saying it is no longer “cost effective”.
ThinCats said it will instead focus on institutional lending.
ThinCats, which was launched in Leicestershire in 2011, said no new loans will be offered on its retail peer-to-peer platform operated by Business Loan Network, the name which ThinCats is regulated under.
A spokesperson for ThinCats said its retail peer-to-peer business had been winding down for some time and the move would not lead to any job losses. The spokesperson said it had sanctioned just two peer-to-peer retail loans on its platform this year.
ThinCats said investors using its peer-to-peer platform will continue to receive interest and capital repayments on the loans that they hold.
Loan Latest
Platform lending of the kind we facilitate here at Money&Co. can be a lucrative activity. The average yield achieved by our registered lenders over more than five years of loan facilitation on this platform is more than 8 per cent, before we deduct our one per cent charge. That return has handsomely outperformed retail price inflation, which has averaged around two per cent over this time.
Historical Performance And IFISA Process Guide
That figure is the result of over £19 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.