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Peer2Peer Finance News | September 16, 2019

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The benefits of online alternative finance platforms

The benefits of online alternative finance platforms

THE UK is now operating a sharing economy. If you have a commodity that somebody else wants you can rent it out to them in return for cash. Companies such as Uber and Airbnb are thriving in this sharing economy, partly due to user-friendly online platforms. The financial services industry has utilised this new trend due to changes.

As the popularity of online banking increases, the traditional banking approach of managing your finances in branch is changing. The ability to complete monetary tasks with the click of the mouse or via the telephone means many customers are choosing not to visit their local branch. As a result, 583 UK branches closed in 2016, and a further 762 in 2017.

Online alternative finance platforms have capitalised on the requirement to have more financial services at your fingertips. These companies have carved positions as legitimate intermediaries in the supply and demand of capital and are using technology to operate online.

These online platforms offer flexibility to their customers and the ability to acquire capital from the comfort of their own home. Money is there to be had and there are certain alternative finance products operating online that allow for easy online connection between borrowers and investors.

Property Bond (ISA)

Wellesley’s ISA-eligible Property Bond offers you the opportunity to invest your money into loans acquired by Wellesley, which are secured against UK residential properties. The Wellesley Property Bond can be held within an ISA, allowing you to earn tax efficient fixed returns of 5.5 per cent per annum with a three-year bond.

Investors can control their Wellesley Property Bonds completely online. To purchase and manage the Wellesley Property Bonds, investors must sign up for an account with The Share Centre, one of the UK’s leading stockbrokers. Wellesley cover the costs of setting up an account with The Share Centre so that investors can benefit from the administration and custody services provided. The platform’s comprehensive range of investment tools make it incredibly easy to manage your Wellesley Property Bond.

Benefits of the Wellesley Property Bond (ISA)

  • Investment secured against property
  • Loans are only ever lent to experience property developers
  • Three-year bond
  • Minimum investment of £1,000
  • Listed on the Irish Stock Exchange
  • Administration and custody services provided by The Share Centre

Invoice trading

In short, invoice trading allows businesses to sell invoices via an online platform to free up cash to an online pool of investors.Unlike traditional invoice discounting, there is no requirement to discount an entire debtor ledger and this is no contractual lock-in period.

To take part in an invoice trading network, both business and investors can apply online to become an approved member of their choice of invoice trading platform. Both businesses and investors are screened for eligibility during this process. Following approval, an account is set up for the business which enables them to sell an invoice online from as little as £1,000 to over £1m. Companies can auction off multiple invoices at a time and multiple investors can purchase percentages of single or several invoices. This results in a business receiving an immediate cash boost whilst investors benefit from healthy returns on their money, easy online application and account management.

Benefits of invoice trading

For businesses, waiting for clients to pay invoices can cause cashflow issues. This type of alternative finance offers flexibility as a plus point, as well as the following:

  • All invoice trading is carried out via a secure online platform.
  • Investors can earn healthy returns on their money through a diversified portfolio.

Reward-based crowdfunding

From charity pursuits to home-made documentaries and new business ventures, our social media feeds are often privy to Kickstarter and GoFundMe page links. By visiting the URL, you will usually encounter a page which details the project, the financial goal they want to achieve, and how the money will be spent.

From as little as £1, online crowdfunding platforms allow individuals to support projects they believe in. Entrepreneurs and start-ups often utilise the online platforms particularly successfully by offering rewards to those who donate.

Reward-based crowdfunding gives those who invest a gift, determined by how much they donate. The creator of the project will specify on the online platform what reward an individual will receive in relation to how much they donate. Typically, the larger the sum donated, the more impressive the gift. Everything is handled solely online, meaning donations can be made in a matter of minutes.

Benefits of crowdfunding

  • Crowdfunding is ‘trendy’ and some people regularly contribute to different campaigns.
  • Online crowdfunding platforms are easy to set up and manage.
  • Only a small percentage of the money raised is collected as a fee.
  • Investors are drawn in by the personal connection of crowdfunding webpages.

Access to new markets

Never before have investors had such a range of opportunities at their fingertips. The web is now rich with opportunities to invest your money and online alternative finance platforms offer access to new types of market. Whilst there is risk with all types of investment and homework is essential, online platforms present easy application, management and a clear picture of what is happening to your capital.

Click here for more information on Wellesley’s Property Bond.