Our friends at the Fintech Times report on the evolving reaction to some very hastily, albeit well-intentioned, attempts to throw money at Britain’s stricken business sector, with small and medium-sized enterprises (SMEs) in most need. Regular readers of this News section will know that our concern is that money, unlike mud, does not stick if it’s just thrown. We run an excerpt from the FinTech Times piece below, with the full article available here.
The anger- which some fintechs still hold- led to some fintechs putting their heads above the parapet, criticising the British Business Bank (BBB), the government-owned development bank which doles out the loans, for giving Barclays, Lloyds and other traditional banks a competitive advantage over fintechs.
In particular, they argued the BBB gave traditional banks a head start by accrediting them to CBILS ahead of fintechs; shut out fintechs from Band of England (BoE) funding accessed by traditional banks; and failed to utilise cutting edge fintech technology to help SMEs devastated by Covid-19.
Historical Performance And IFISA Process Guide
That figure is the result of over £21 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.