There is life in the direct-lending sector yet. Peer-to-peer lender Mintos is gearing up to launch its first crowdfunding campaign on Crowdcube, as reported by our friends at AltFi:
The round, which is set to go live in the second half of November, will form part of a larger fundraising effort with cash being raised from several VC firms for a yet to be disclosed figure.
Martins Sulte, CEO and co-founder of Mintos, said: “Demand for alternative investments has grown since the interest rates on deposits have been persistently low and equity markets have become crowded—leaving retail investors with very few good options.”
“In the past, when retail investors did look at alternative investments, they often found that these came with high minimum investments and high fees that kept them out of the mass market. Current demand is for modern solutions that are both accessible and not correlated with traditional assets.”
Mintos says it chose to launch a crowdfunding campaign to give its users the chance to own a limited number of shares in the fintech.
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.