What's the average yield on a peer-to-peer (P2P) loan? How do you get a quick, fast P2P loan? What does P2P borrowing entail?
All these questions – and many more – are answered on site in the Knowledge Hub at the foot of most pages (Click on "About P2P", "About Crowdfunding").
For lenders looking to get a good return on capital by lending to carefully vetted companies seeking funds for growth, the answer to the first question is: "An average of over 8 per cent gross, 7 per cent net of our charges." All loans on site can be held in an Innovative Finance ISA and the proceeds enjoyed free of tax. How to do that? See below...
A Process Guide To Innovative Finance ISA Investment
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:
We currently have one offering on site - an A-rated loan with a fixed-rate yield of 8 per cent, 43 per cent filled. As we say above, more are due on site soon.
The ISA allowance for 2018/19 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 an earlier article on security, access and yield.
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. Capital is at risk, once loaned.