After gaining full authorisation from the UK’s Financial Conduct Authority (FCA) in May, social-circle peer-to-peer lender Flender is launching an Innovative Finance ISA (IFISA) offering businesses and consumers a more tax-efficient way of investing.
Dublin-based peer-to-peer finance company Flender is entering the UK market, not only with an innovative approach to peer-to-peer lending through its focus on social-circle lending, but also with an investment option that’s sure to attract plenty of attention – the option to invest in the company’s tax-free Innovative Finance ISA (IFISA).
In April 2016, the UK government revealed that under the new Innovative Finance ISA (IFISA), peer-to-peer lending would be included in the existing tax-free Individual Savings Account (ISA) scheme. Flender’s Innovative Finance ISA (IFISA) is offering lenders the chance to invest up to £20,000 annually on its online lending platform, but without having to pay income tax or capital gains tax on the interest. This could mean savings from 10% up to 28% depending on a lenders income bracket.
Flender hopes that offering IFISAs will lead to an increase in the supply of lenders willing to offer finance to SME enterprises. “The IFISA is an important development for our business, and will help to widen the scope of possible investors in peer-to-peer lending platforms like Flender. Offering a tax-free allowance is a compelling incentive to investors who are looking to support SME businesses and private individuals – and make an attractive return on their funds,” says Flender’s Managing Director, Kris Koik.
By 2018, peer-to-peer lending in the UK could be worth over £5 billion, up from less than half a billion in 2013*. But as the alternative finance market grows, so too does the need for regulation. The UK is currently the European leader in peer-to-peer lending, but only one in four peer-to-peer lenders are approved by the UK’s Financial Conduct Authority (FCA). Having met and complied with the strict guidelines set by the FCA, Flender believes this achievement should provide reassurance to cautious investors in the UK considering peer-to-peer lending as part of their investment portfolio. “Achieving FCA authorisation demonstrates our commitment to fair and honest business practices and is a great way to launch our foray into the UK peer-to-peer lending market,” says Koik.
Friendly crowd finance
Flender encourages users to borrow and lend money to friends, connections or businesses by allowing borrowers to create and share a personalized link to their campaigns on social networks, or invite chosen individuals directly by email.
To raise initial launch funds, Flender itself turned to crowdfunding, and raised £501,000 through a public offering on the equity crowdfunding platform Seedrs. Since then, the company has also attracted further funding from investment group, Halo Business Angel Network.
Flender’s successful launch in Ireland earlier this year has seen the company achieve loan demand of approximately €4 million so far, with average yield rate on the platform currently ranging from 8% to 10.5%.
*‘Peer-to-Peer Lending: UK’ market research report by Research and Markets. https://www.