IFISA Guide: SME loans
This month, we provide details on some of the SME-focused IFISAs on the market
Ablrate’s IFISA offers returns ranging between 10 and 15 per cent, enabling investors to fund asset-backed loans to UK businesses. It is a flexible tax wrapper, so investors can withdraw and replace money within the same tax year, and there is a minimum investment of £100.
ArchOver’s IFISA enables investors to fund secured business loans and enjoy tax-free returns of up to 10 per cent per year. Investors can lend to individual businesses or use the auto-invest function, which spreads funds across a range of loans. It is a flexible tax wrapper with a minimum investment of £1,000 for the manual lending option and £250 for the auto-invest product.
Read more: Our comprehensive guide to IFISA investing
Assetz Capital provides loans to small businesses and property developers, all of which can be held within the platform’s IFISA wrapper.
Returns vary depending on the account, going from 4.1 per cent to 6.25 per cent on its auto-invest products, and up to 15.5 per cent with its manual lending option. Investors can transfer in any funds from ISAs from prior years and there is a minimum investment of £1.
Crowd2Fund was one of the very first platforms to launch its IFISA and its tax wrapper now has an estimated average return of 8.7 per cent.
Investors can choose which businesses to lend to, with a minimum amount of £100.
MoneyThing’s IFISA is one of the highest-paying tax wrappers that invests in secured business loans, offering annual returns of up to 13 per cent.
Investors can pick their own loans and it is a flexible IFISA, with a minimum investment of £1.
Read more: Coverage of our IFISA roundtable event
The best-known of the P2P business lenders, Funding Circle finally opened its IFISA to new investors in April 2018.
There are two lending options to choose from: Balanced, which has a projected return of six to seven per cent, lends to the full range of businesses on the platform and Conservative, which has a projected return of five to 5.5 per cent, lends to businesses that have been assessed as lower risk.
The minimum investment in this flexible IFISA is £1,000.
Read more: The IFISAs you can open for £100 or less
LendingCrowd offers three IFISA products: the Growth ISA, the Income ISA and the Self Select ISA, all of which can be held within the same IFISA wrapper.
The Growth and Income ISAs automatically spread investors’ money across a range of loans and have variable target rates of six per cent and 5.6 per cent, respectively.
The key difference between the two ISAs is that customers can withdraw their interest with the Income ISA, while the capital repayments will be automatically reinvested.
The minimum investment for both products is £1,000.
The Self Select ISA lets investors choose which loans they want to invest in. Returns start from 5.95 per cent depending on the credit band of the loan and the minimum investment is £20.
This article featured in the March issue of Peer2Peer Finance News, now available to read online.