Further to yesterday’s news item, the big equity crowdfunding deal on the other side of the alternative-finance fence has hit the regulatory rocks.
Seedrs CEO Jeff Kelisky echoed Westlake’s comments and added that “we had prepared for this possibility, and we’re pleased to announce that we have agreed a new funding round for the business.”
While Kelisky didn’t reveal any details about this round’s size, he added that more details would be announced “very shortly”.
“Given the strength of the business’s recent performance, we will be able to use this round to return to our pursuit of major growth initiatives.”
On Crowdcube’s side Westlake added that the crowdfunding platform had seen two consecutive quarters of profitability in 2020, along with record revenue, and that he expects the business to be profitable again in the first half of 2021.
In their evidence submitted to the CMA as part of the merger approval, the two platforms said they faced closure unless the deal was greenlighted.
As part of the investigation, however, the CMA found that the collapse of one or both firms would be unlikely if the merger were not to go ahead and that “both parties will continue to compete to offer services for all types of SME customers.”
Latest Loan Offer
The latest loan offer on site has an A-rating and an annual rate of interest of 7 per cent. The term of the loan is 12 months. The offer, just launched, is now 76 per cent filled.
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.