The tumult of news continues. Some of the FinTech sector’s players are jockeying for position ahead of the return of whatever it is we’re going to call normality once the Covid-19 epidemic has abated.
Nucleus Commercial Finance has launched a new lending product to help UK SMEs borrowing through the government’s Coronavirus Business Interruption Loan Scheme (CBILS) top-up funds.
The new line of funding, named Business Growth Loans, allows companies to borrow up to £25,000 as the government-backed scheme comes to an end with a term of six months. Qualifying businesses will have the option to apply for a top-up every quarter.
CBILS will finish on 31 March but will be replaced by a new scheme announced in last week’s budget.
Chirag Shah, CEO, Nucleus Commercial Finance comments: “We continue to be fully supportive of CBILS and are proud to have lent a total of £180m to date through the scheme. Our lending through CBILS means we can see the additional support businesses currently require and the funding gap it will leave once the scheme ends. This has driven us to design a product that will continue to provide businesses with the vital finance they need to survive and recover.”
The launch of Business Growth Loans follows Nucleus securing a new £200m funding line in January from two global investment management firms. The finance increases Nucleus’ capacity to support businesses in 2021 through this new product and a number of existing solutions.
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 2020/21 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.