Another great Budget for marketplace lending. March industry news
Hot off the heels of the announcement in the Autumn Statement that investors will be able to offset their losses against income tax from this month, the Chancellor announced last month that peer-to-peer lending would be included within the new Personal Savings Allowance. The tax break will apply to both peer-to-peer lending and cash savings, in the latest boost to the sector. Read more about what the Budget meant for your savings and investments in the Financial Times, Daily Telegraph, the Times and on our blog. After advice from HMRC, we have also made a change to the way we charge for loan servicing. Neither investors nor borrowers will pay any more, and you can read the full details here. Please get in touch with any questions.
Some positive news last month that traditional sources of finance are beginning to lend more to small businesses again. The Federation of Small Businesses conducted a study that showed 60% of loan applications were approved in the past three months compared to only 45% a year ago. As the landscape continues to become more competitive, this is only good news for small businesses who are trying to access finance. 77% of businesses who have already borrowed through Funding Circle would always come back to us first, over a bank, showing the demand that exists for fast, fair and transparent finance.
“So what is fintech?” In this article, written by Andrea Leadsom, City Minister and Economic Secretary to the Treasury, she discusses the full spectrum of financial technology and how it is transforming the way people can lend directly to small businesses in their community and across the country. At Funding Circle, we are right in the middle of this revolution, with ever-growing awareness amongst investors and borrowers, as well as continued support from the Government to help further develop this new source of finance. An exciting future for investors and businesses in the UK is upon us.
10 years ago this month, a new way to grow and invest your money began when Zopa, a peer-to-peer lender for personal loans, launched. Since then over £2 billion has been lent out via this model in the UK alone, helping thousands of people and small businesses prosper across the country. Read more about how the industry has blossomed over the years in the Independent.
This piece follows the story of a mother using peer-to-peer lending as a way to save money for her children to go to university. With £11,000 invested to begin with, and assuming she continues to deposit £50 each month, she will have saved £27,815 in 11 years. She states that she isn’t concerned that peer-to-peer lacks deposit protection because her money is lent out in small amounts to many people and companies.
Also to come out of the recent Budget Statement, from 2016, banks will be mandated to refer small businesses to financial companies when they aren’t able to lend. The British Bank is leading the process with careful steps to get the system implemented to become a designated clearing platform. Exciting news for those small businesses that aren’t aware of the other forms of finance and great news for us in being able to help them succeed.
This month, the annuity changes announced last year will come in, meaning people will have more freedom when it comes to thinking about how best to maximise their pension pots. Everyone over 55 will be able to draw down the cash in their pension and invest it how they wish. As people look to make their money work harder, peer-to-peer lending is an attractive option. Added to this, the news that the lifetime allowance in a pension has been reduced from £1.25 million to £1 million, people will be searching out higher returns from their savings and investments in order to compensate for the reduction in tax benefit. At Funding Circle, you can earn attractive returns without the volatility of the stock market, but always remember that when you lend, your capital is at risk.