Regular readers of this News section will be aware of Money&Co.’s increasing focus on niche markets, such as music-rights lending, and property-backed loans.
LendInvest was responsible for the lion’s share of peer-to-peer property lending in 2019, accounting for a whopping 58 per cent of the £1.7bn lent during the year, according to data from the AltFi Alternative Lending State of the Market Report 2020.
The data provided by Brismo (recently acquired by LoanClear) shows an explosive year-on-year growth of the property lending sector up from £1.2bn in 2018, but with much of the expansion contained in LendInvest’s loanbook.
In terms of sheer growth, CapitalRise topped the rankings with its 2019 originations up 312 per cent to £33.9m, helped by a shift to larger loans and securing an institutional funding line from an unnamed financial institution.
Looking ahead lenders surveyed as part of AltFi’s State of the Market Platform Survey 2020 were among the most bullish of any lending sector.
Nearly three quarters (72 per cent) of the platforms surveyed said they believe their ability to find attractive borrowers in the next 12 months will increase, and just 14 per cent think it will go down.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 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.