New Tools And Accessories Offer For UK Small Businesses
The California Gold Rush. The conventional wisdom is that the most reliable way to make money from the mad 19th Century scramble for gold in them there hills was to set up supplies for the prospectors. Yes, there was a chance of striking the mother lode, but thousands of prospectors all needed ropes, jeans, tents and provisions.
There’s a parallel here with new-wave finance for small and medium-sized enterprises – the sector to which we at Money&Co. cater on the borrower side.
Enterprise Nation‘s new ‘Make a Plan’ app, launched in tandem with Mastercard, is set to help micro and small businesses (MSEs) access guidance, tools and support from their phone.
The newly-developed app has been designed to direct MSEs’ business growth by supplying relevant resources, programmes and digital tools from different support organisations to help founders build their businesses. Businesses will be able to upload their details and generate a digital business action plan which they can use to track progress on their phone.
The app comes at a time when more than one in 10 working-age adults in the UK plan to start a business in the next three months, which equates to around three million individuals looking for early-stage business support and reflects an upward trend in the ambition to start a business.
In addition to this, data supplied by Enterprise Nation highlights how 70 per cent of early-stage businesses are looking for advice on how to build and improve their cash flow plan, while 55 per cent of more mature growing businesses are looking to establish a financial reporting routine.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
That figure is the result of over £24 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.
- Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
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:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
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.