INVESTORS wishing to invest tax-efficiently in peer-to-peer business loans have a wide variety of Innovative Finance ISAs (IFISAs) to choose from.
In this article, we take a look at six more SME-focused IFISAs on offer.
Assetz Capital has a wide range of investment accounts, but at present the IFISA wrapper is only available on automated accounts.
There are two easy access accounts: Quick Access, which has a capped target interest rate of 3.7 per cent a year gross; and 30-Day Access, which offers a target rate of 4.25 per cent gross. The Great British Business Account Series 2 has a target rate of 6.25 per cent on loans of between six months and five years.
The Manual Lending account, which allows investors to choose loans themselves, is due to be included in the IFISA in the first quarter.
Crowd2Fund’s IFISA offers investors the chance to earn an average 8.7 per cent APR return by lending to businesses listed on its platform. Each investment has a pre-defined interest rate of between six per cent and 15 per cent.
Crowd2Fund also has a ‘smart-invest’ feature which lets investors automatically invest money into loans that are selected based on the amount invested and desired interest rate. Investors receive monthly repayments which can be automatically re-invested.
The minimum investment on the platform is £100.
Downing Crowd’s IFISA enables certain people to invest in businesses via bonds that are typically secured on the company’s assets. These crowd bonds typically pay interest of four to seven per cent a year. Investing is limited to people who are either certified high net worth individuals or self-certified sophisticated investors, or “restricted investors” (as defined by the Financial Conduct Authority) who can confirm they will invest less than 10 per cent of their net assets in bond offers. The minimum investment in bond offers is £100.
Folk2Folk’s IFISA offers monthly interest of 5.5 per cent or 6.5 per cent, depending on the loan-to-value and loan term. Investors can support local and rural businesses, such as farmers, pubs and yoga studios. Loans are secured against the borrower’s land or property. Investors can choose the location of the borrower and which sectors they want to support or avoid.
The minimum investment is £20,000.
Money&Co’s IFISA enables investors to earn a seven per cent target return on their investment. Investors choose which borrowers they like and set a rate via an auction process. A credit rating is assigned to each company, providing guidance on what rate of interest they should ask for. When the auction ends, the borrower decides whether to accept the average rate. If they do, investors will start to receive monthly payments at the rate they requested.
The minimum investment in Money&Co’s IFISA is £1,000.
UK Bond Network
The UK Bond Network IFISA lets people invest in corporate bond issues via an auction process. Interest rates are typically between seven and 12 per cent and loan terms are between one and five years. Repayments will occur monthly, quarterly or bi-annually depending on the chosen bond. Investors must be certified high net worth individuals, sophisticated investors or institutional investors. The minimum investment is £5,000.
There are also IFISAs that enable people to invest in consumer loans. You can read about these here. Look out for our upcoming coverage of property-focused IFISAs.