Being able to offer the coronavirus business interruption loan scheme as part of an Innovative Finance ISA (IFISA) would benefit both lenders and small and medium-sized enterprise (SME) borrowers, Money&Co has claimed.
Nicola Horlick, chief executive of the platform, said that having a government-guaranteed loan in an IFISA would be attractive and might encourage people to invest in loans that would help businesses impacted from the pandemic.
“If people are putting money into an IFISA to invest into loans to businesses, and the government is guaranteeing that capital, that would encourage people to lend,” she said.
“If it’s in an ISA you then get the income completely tax free. That seems to be very attractive having a government-backed loan in your ISA and getting interest that’s tax-free.”
Horlick has submitted this idea to the British Business Bank (BBB) and believes it will most likely come to fruition.
“We want to encourage people to lend to SMEs at this time,” Horlick said.
“There’s no better way than them knowing there’s a government guarantee sitting behind them, so we’ll see if they’ll agree.”
David Bradley-Ward, chief executive of Ablrate, which has recently sent its application to the BBB to be included in the scheme, agreed with the idea.
“I think it would be absolutely excellent,” he said.
“It would be quite a nice bit of business and you’re solving two problems, putting some income back into the pockets of clients and also getting money out there to businesses which is desperately needed at this time.”
The BBB has been contacted for comment.