Private investors for small business loans
Crowdfunding has grown phenomenally fast in the UK. From a standing start in 2010, UK investments made through crowdfunding sites now stand at about £5.5 billion (Altfi.com) . This is a phenomenal statistic, and points to a great British success story. We are way ahead of the rest of Europe in this field. They, with a much larger economy and population, have invested only about £1billion.
This is a great result achieved to date without any taxation incentives.
In this short article we will highlight why 2016 is set to be a record braking year for peer-to-peer lending.
New Incentives for Small Business Investors
The introduction of the Innovative Finance ISA at the start of the new tax year (starts 6th April 2016) is a real positive development for the UK Crowdfunding market. This latest development from the investment world will mean private investors will be able to invest up to £15,240 a year through crowdfunding sites without paying tax on any resulting income or gains.
Given that the returns on debt based crowdfunding sites are about 6.26% (source Liberum Altfi index) after costs and bad debts, whereas bank accounts typically yield 0.5% to 3%, we think that the number of investors through crowdfunding sites has the potential to grow very fast indeed.
It seems that the Sunday Telegraph agrees with this conclusion. Last Sunday it said that the numbers of crowdfunding investors could rise from about 100,000 now to 500,000 in 2016, and given the ISA limits the amount invested could rise from the current typical investment of £5,000 to £8,000. They think that the numbers of investors in due course will probably swell into the millions.
And why not? Invest through Go2 Business Loans, get a great return on your money and make a real difference to local businesses.
Note: Investments through crowdfunding sites are not covered by the Financial Services Compensation Scheme, and so there is no compensation for losses.
This is peer to peer lending and your investment is at risk. We encourage investors to diversify their portfolio and to review all investments to ensure that they meet with their own investment criteria.