A great Budget for peer-to-peer lending

Included in the small print of today’s Budget were two big announcements for the peer-to-peer lending industry; ISA inclusion and a consultation into the referral of small business leads from banks to alternative funders.

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Peer-to-peer loans allowed into ISAs

In section 1.169 of the full document, the Chancellor confirmed that peer-to-peer lending will be allowed within tax-free individual savings accounts (ISAs) for the first time. The move follows a consultation over the last few months and will further increase the choice that ISA savers have in terms of how they invest.

Our data shows 41% of investors will invest more in peer-to-peer lending now that it has been included within ISAs. This is a huge win for British investors up and down the country, and represents a seminal moment for the industry. The news comes ahead of formal regulation of the peer-to-peer lending industry from 1 April, and you can read more about it in the Financial Times.

We’re in discussions at the moment with the Government about how this will work and a formal timetable for when it will be introduced. We’ll update you with more information when we have it.

New consultation into the referral of small business leads

Also included in today’s Budget (section 2.234) was confirmation that the Treasury will launch a new consultation into the mandatory referral of small business leads from banks to alternative funders, where the former are not able to lend.

We want to help thousands of British businesses access the finance they need to grow, and we have already been talking to a number of banks about the possibility of referring small businesses to Funding Circle.

Today’s news is a welcomed step and another example that peer-to-peer lending and banks can be complementary sources.  A core part of a bank’s business is having a positive banking relationship with their customer; partnering with a non-bank provider, like Funding Circle that does not offer the range of products, (business current accounts etc.), that a bank does, makes a lot of sense to us.

News

Natasha

Head of Corporate Communications

 

12 thoughts on “A great Budget for peer-to-peer lending

  1. Fantastic news! Any idea how Funding Circle will be implementing this? Will we be able to transfer our existing funding circle money into an ISA when it is available?

  2. Is it worth holding on and doing your ISA later in the year, or is it something that won’t happen until next year??? I normally do my ISA funding in the first 2 weeks of April!!!

  3. Hi all, the exact timings and mechanisms for how this will work are still being finalised by the Treasury, but we are part of these conversations so will update you as soon as anything is confirmed. We expect the process to take about a year though, and we think that initially it will work so that investors apply for a peer-to-peer lending ISA through the platform. Will be in touch when we have more information.

  4. Great news! I will certainly invest more as a result and may (if allowed) transfer my cash ISA into it. Are you aware if this will be allowed?

    • It’s still yet to be confirmed but at the moment you are able to transfer a cash ISA into a stocks and shares ISA, so we think it’s likely you will be able to transfer your existing cash ISA into a peer-to-peer lending ISA. We will definitely be in touch with you all once more details have been confirmed.

  5. Natasha I appreciate the Government is engaged in a consultation period with the P2P lending industry. Do you believe that existing money a lender already has in Funding Circle will be able to be moved into a P2P ISA or will it have to be a new tranche of money into Funding Circle ? Thx

    • Hi Tigerman, that hasn’t just been confirmed but as soon as we know I will be posting an update on the blog and forum.

  6. Hi, can any one help? I am finding it impossible to raise finance for a new business concept that I have been working on for over 2 years. I am looking for any lending source that caters for Start-up finance for my business idea. I have over 35 years experience in business and I am very excited about this one! If any one will listen, crunch the numbers with me and be open minded to a great opportunity to succeed, I am ready. I have my business plan and business concept ready to present to any one that will keep an open mind. 🙁 HELP!!

  7. As with much of the Budget, the ISA announcement is not exactly dramatic news – it was announced as a decision “the Government will” in the 2014 Budget, and now they plan to publish the results of the consultation this year – this is not exactly an announcement that it will happen, or when, is it?

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