What are the benefits of using an Innovative Finance ISA to lend to small businesses, both for the individual investor and for the business?
Build a stronger, more vibrant business community
Keen to support small businesses and earn a tax-free return at the same time? This could be your own business, a business owned by a friend or family member, or a business listed on the rebuildingsociety.com platform. When you put your loan through an Innovative Finance ISA (IF ISA), you receive all the same the benefits of a standard ISA and you choose how your funds are employed.
Take control of your investments
Lending to businesses is an accessible, efficient and productive way of investing money. You’ll be directly supporting the UK economy, helping SMEs grow and earning yourself a better return on your hard-earned money. Plus, you choose who lend to, and set the rate at which you want to lend.
Play a role in your community, lending to businesses that are local to you, or which share your ethos. Our cashback incentives include an extra .5% on loans to businesses in your postcode!
Many small businesses struggle to get funding. Bypassing the bank and going direct to individual lenders allows businesses to get vital funding quickly and at a better rate than the bank. Often, individual lenders will look at the story behind the loan request and see potential that a bank didn’t.
Community-based focus
Businesses apply for a P2P loan for many different reasons, from buying another business, to hiring additional staff or carrying out R&D on a new product. Your microloan to them is combined with microloans from other lenders, including in some cases local councils such as Leeds City Council and Basildon Borough Council.
Choose how much to lend, from £10 up to the legal annual ISA allowance, currently £20,000 per year. Transfer existing ISAs or deposit funds from your bank, then read through the detailed, transparent business profiles on our platform and decide which businesses to invest in. Bid at an interest rate you select, up to the maximum set for each loan. You can access funds by selling your microloan on the Secondary Market.
We also have automated tools for helping you vet and bid on loans, should you choose to use them.
BuyBack Guarantee
Investing in small businesses does carry the risk that the business may fail or be otherwise unable to repay the loan. Our BuyBack Guarantee aims to reduce your capital risk. It’s an agreement between individual lenders on the Secondary Marketplace; the seller will buy back the microloan should the loan default.
The purchaser pays a premium for the benefit of reassurance. If the microloan falls into arrears by more than 60 days, the vendor will buy it back. This gives the purchasing lender peace of mind in exchange for a reduced return and gives the vendor a quick profit for keeping the potential future liability.
The buyback will be automatically facilitated by the platform, returning your capital outstanding on the loan.
Lenders and borrowers on rebuildingsociety.com form part of a strong and growing community, committed to supporting the UK economy
Earn a passive income
With a lifetime average net return of 8.9% across publicly funded and private loans, and 6.12% for public loans exclusively, your investment not only helps small businesses, but can also provide a passive income. It’s possible to lend at interest rates of up to 20% on our platform because we do not take a margin.
100% of the interest paid by borrowers is relayed to the lenders.
More than finance
We fix two frustrations; the frustration many business owners have with access to finance and the frustration lenders have with the disappointing levels of interest available from traditional investments and savings solutions.
We began accepting loan applications in September 2012 and funded our first deal in January 2013. In February 2016 we were one of the first platforms to receive full FCA authorisation and shortly thereafter launched our IF ISA accounts. Today we’ve facilitated over £17m and counting in loans from more than 250 UK SMEs looking for finance.
Lending to business is not without risk; please consider the risks before investing. Businesses may at times struggle to make repayments and may ultimately default on the loan. If this happens, your capital and unpaid interest are at risk. Net returns figures correct as of 29 June 2022. Peer-to-business lending is not FSCS protected, and past returns are not an indicator of future returns.
