Levels of awareness of and trust in alternative finance need to rise, as we reported yesterday. We bring together small companies seeking funds to grow with individual lenders seeking good returns on their capital. But recent research shows that small companies, who often don't like banks, still don't seriously consider alternative sources of finance, such as crowdfunding of the sort offered by Money&Co.
Take the trouble to understand what you're putting money into. The things that you can gain access to via a crowdfunding platform such as Money&Co. are typically different from traditional bank accounts and savings products. They are a different type of asset, an alternative way of deploying money in what is known as the alternative finance sector.
Avoid the common confusion between equity crowdfunding – which gets a lot of attention in the media – and debt or loan crowdfunding. Money&Co. is simply a way of bringing people and businesses together through the mechanism of our internet platform. We are a peer-to-per (P2P) business-lending platform.
Bear in mind that you're lending to a borrowing company. You're not lending to Money&Co. We vet the borrowing companies using a rigorous credit-analysis process. We're an intermediary, charging a fee. The P2P loan is directly between you and the company, and is facilitated by us.
Examine the borrowers' proposals in detail. We use our best endeavours to ensure that every representation of the borrower is true – about the market, the prospects, the company's track record, the reason for the loan, the veracity of the audited accounts, etc. But we cannot and do not warrant that this is so.
Don't be seduced by yield. The returns can be attractive, but a high yield can mean high risk.
P2P Current Yields
Money&Co lenders have achieved returns of just under 9 per cent - before deduction of our one per cent fee - in the three ears and nearly £10 million of loans facilitated on our platform.
We currently have two P2P loan offers on site - both fixed at 8 per cent yield. Webuyanyhome is A+ and property-backed. Mar-Key is A-rated, and is now over one quarter funded. Further detail is available to registered Money&Co. users. Both loans – each over one fifth subscribed at the time of writing - can be held, tax-free, in an Innovative Finance Individual Savings Account, or Innovative Finance ISA.
If you haven't made a loan via Money&Co. before, please read the risk warnings and the FAQ section. You may also wish to consult a financial adviser before making an investment.