LONDON--(BUSINESS WIRE)--Money&Co., a leading peer-to-peer (P2P) business lending platform, is pleased to announce that savers frustrated at low interest rates from cash ISAs can boost their returns and provide British businesses with the growth capital they need by investing in its Innovative Finance ISA (IFISA).
The pioneering IFISA offers savers a projected return of more than 7 per cent. a year tax-free through Money&Co.’s peer-to-peer lending platform. Money is lent to established businesses with a proven track record, providing companies with an alternative to the mainstream banks when it comes to raising funds.
Nicola Horlick, Money&Co. founder and chief executive officer, said: “This is a great innovation for savers struggling to find decent returns and for British businesses looking for ways to fund growth. Not only can we offer savers a far better return than they would get from a cash ISA, but they will also have the satisfaction of knowing that they are helping British businesses prosper at a time when they are all too often ignored by the big banks.”
Money&Co. offers a projected return of over 7 per cent after fees and free of tax, against an average of 1 per cent. return on the £270 billion held by Britons in cash ISAs. The minimum investment is £1,000 and savers can invest their entire £20,000 ISA allowance with Money&Co. They can also transfer funds held in existing ISAs.
The total loans facilitated by Money&Co. since it started in 2014 is just under £11 million to 36 companies and the average size of loans made to businesses is £300,000. Horlick said: “We are careful to avoid risk and only lend to profitable businesses that have been trading for at least three full years and have assets such as property or equipment to use as security.
“The average age of these companies is over 15 years. Essentially, these are successful small businesses that are the backbone of the British economy.”
One of the companies lent funds by Money&Co. is Dorset-based Mar-Key Group, which manufactures and installs large marquees for sporting events, weddings and temporary industrial structures.
David Tabb, Mar-Key Group chairman, said: “After being faced with banks who had no appetite to lend to us, we were pleased when Money&Co. made a site visit and could see the real value of our assets. They gave us the funds which allowed us room to grow and our turnover is now approaching double what it was when we first took the funding. IFISA borrowing is the way forward.”
Savers can choose which companies they lend to, rated from A+ for the safest loan to C+ for the riskiest (although a C+ loan is still creditworthy), and with likely yields of between 7 per cent and 10 per cent per annum. The average yield across all Money&Co. loans since it completed its first loan in July 2014 has been 8.6 per cent, before annual charges of 1 per cent.
“It is important that savers go into this with their eyes open and understand the potential risks as well as the rewards,” said Horlick.
Income is paid monthly, either directly into savers’ Money&Co. accounts or reinvested for further growth.
Notes to editors:
Money&Co. is a peer-to-peer (P2P) business lending platform, matching lenders with companies that want to borrow money. It was founded by Nicola Horlick and the website was launched on 29 April 2014 and the first loan was completed in July 2014.
Money&Co. is regulated by the Financial Conduct Authority and is approved as an ISA manager by HMRC.
It only facilitates loans to UK businesses. They must have been trading for at least three full years and must be profitable before it will lend to them.
Money&Co. will not accept credit bids from companies involved with gambling, pornography or the manufacture of weapons.
When a company applies for a loan, Money&Co.’s automated credit system checks to make sure the applicant meets the lending criteria. If it does not, it will not proceed. If it does, the credit team will call the company and arrange a visit to meet with management. A credit note will be submitted to the credit committee which will consider the application. The credit committee meets on an ad hoc basis, which means that loans can be approved in as little as a week.
Income is not guaranteed and capital is at risk, although Money&Co. take a first-ranking debenture over each company that it lends to. Peer-to-peer lending is not currently covered by the Financial Services Compensation Scheme (FSCS).
Money&Co. has had no bad debts to date although there have been some defaults. Past performance is not a guarantee of future performance.
ISA investors must be over 18 years old and pay tax in the UK.