The snippets of news keep coming through. With the sunlit uplands officially scheduled for the end of the first quarter next year, the fallout from a super-hurried set of measures to shore up SMEs is beginning to make itself felt.
HM Treasury has stated that it’s ultimately the responsibility of lenders, and not necessarily the nation’s government, to recover debts under the different COVID-19 loan schemes and packages.
“The UK government’s four main business support schemes, which includes the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS), have provided approximately £65.5 billion (appr. $87.2 billion) to UK-based companies as of November 16, 2020, according to data provided by the British Business Bank.
Now that the money has been loaned out to all these businesses, there are concerns that many of these outstanding loans might not be paid back in time or at all.
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.