AltFi reports good news on a FinTech outfit which has been – and continues to be, despite this item – surrounded by less than flattering rumours. Below is an excerpt from AltFi’s report (published yesterday) and a share price chart – of purely indicative nature, Googled today – showing a positive market reaction to the news:
SME lender Funding Circle could be the next fintech to break even after it had a record 2020, according to a trading update from the firm.
The alternative lender said that it will become profitable in its Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (AEBITDA) before the year-end, a much better position than it previously thought.
In the market update, the listed firm said that as a result of a strong lending appetite from SMEs throughout the year, that “in the four months ended 30 October total income for the Group was up 38 per cent on last year.”
Much of this growth was led by Funding Circle’s UK-based lending, with the alternative lender’s income jumping by over two thirds (67 per cent) here in the UK.
The stock market update also revealed that, as of last week, Funding Circle has approved roughly £1.85bn and originated £1.35bn in CBILS loans.
In the US, Funding Circle’s total income increased by ten per cent year on year in the four months running up to the end of October.
The fintech also revealed that it expects its total income from the second half of 2020 to be roughly 20 per cent higher than the whole of 2019.
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.