A huge step for Lending Club. Yesterday they launched loans to businesses. Lending Club business loans will range from 15,000 US$ to 100,000 US$ initially, with plans to increase to 300,000 US$ in the future. The loans carry fixed interest rates starting at 5.9% with terms of one to five years and no prepayment penalties. While Lending Club already offered loans that were used for “business purposes” in the past, these were actually consumer loans – the borrower was an individual rather than a company. Obviously the application process and the evaluation of creditworthyness needed to be redesigned for this type of loans.
This will have a big impact on the p2p lending market in the US. It vastly increase the potential market size and will enlarge the choice of loans that investors can lend to.
The UK government decided today that the annual ISA allowance (preferential tax treatment) will be increased from 11,520 to 15,000 GBP. The increased limit will apply to a single ISA, called the New Isa or NISA, which combines the current cash and stocks & shares wrappers.
Under the new regime, individuals will be able to invest the whole amount in cash, compared to present rules where only half of the 11,520 GBP can be invested in cash and the rest in stocks and shares. Current Isa savings will also enjoy the new flexibility. The increased limit will come into force on July 1st.
Osborne said: “We will make Isas simpler by merging the cash and stocks Isas to create a single new Isa. We will make them more flexible by allowing savers to transfer all of the Isas they already have from stocks & shares Isas into cash or the other way around.”
In addition, the Government intends to allow p2p loans to be held within a NISA and will consult on how to implement this later this year. The Government will also explore extending NISA eligibility to debt securities offered via crowdfunding platforms.
Zopa CEO Giles Andrews says: “Peer-to-peer ISAs are the most exciting thing to happen to the industry since Zopa launched back in 2005. This is a game changing moment for all savers. With ISA inclusion now a reality, we expect to see thousands of people transferring their existing ISAs over to Zopa once we launch them. Peer-to-peer ISAs will help provide a high tax free return and bring consumer savings back to life, even better to know is that all lending is covered by our Safeguard fund, so you can earn high returns and feel safe that your money is protected.”
On the announcement, Rhydian Lewis, CEO and founder of Ratesetter has said: “We welcome today’s news that ISA eligibility will be extended to peer-to-peer loans. The government is clearly acknowledging that something must be done to breath fresh life into this failing sector as one of the poorest ISA seasons on record comes to a close. Research has shown that a third of savers would consider P2P ISAs (*Peer-to-Peer Isa Survey, Populus, compiled January 2014)., so this news could truly reinvigorate the ISA sector. The change has the potential to give cash-strapped retirees and young people struggling to get on the property ladder the return on their savings investments that they really need.”
Funding Circle co-founder James Meekings says the move will open up peer-to-peer lending to a new audience. “This news is a huge win for British investors up and down the country, and represents a seminal moment for our industry,” he says. “The inclusion of peer-to-peer lending in ISAs ensures British people earn inflation-beating, tax-free returns whilst helping support the country’s economic recovery.”
New ISAs 1.167 Budget 2014 announces a radical reform of the ISA system. Around half of all UK adults have an ISA, and in order to give these savers greater choice in how they decide to save, the Budget announces that the ISA will be reformed into a New ISA (NISA), which will be a simpler product with equal limits for cash and stocks and shares. This will mean that for the first time ever, savers will be able to transfer previous years’ funds from stocks and shares ISAs into cash ISAs. From now on, savers will have complete flexibility over how they choose to save and invest, within the overall limit. 1.168 The government also wishes to allow people to save more tax-free, so they can see their savings grow year on year. The Budget announces that the annual investment limit for the NISA will be £15,000 a year . This nearly trebles the current limit of £5,760 a year for saving in cash ISAs, and will benefit more than 5 million people who currently reach their cash ISA limit, three-quarters of whom are basic rate taxpayers. It will also increase the stocks and shares limit by nearly a third, from £11,520, and means in total over 6 million people will benefit from the higher overall limit. The government will also raise the limits for Junior ISAs and Child Trust Funds from £3,720 to £4,000. These changes will be introduced from 1 July 2014. 1.169 To further increase the choice that ISA savers have about how they invest, ISA eligibility will be extended to peer-to-peer loans, and all restrictions around the maturity dates of securities held within ISAs will be removed. The government will also explore extending the ISA regime to include debt securities offered by crowdfunding platforms
Today Lendico launched the p2p lending service in Austria. It is the fourth country Lendico enters after Germany, Spain and Poland. Austria is pristine territory for p2p lending. Up to now no services were available to Austrian borrowers. Interest rates range from 2.99% to 15.99% (comparable to Lendico Germany) depending on credit grade. Loans are possible up to 25,000 Euro for terms between 1 and 5 years. Lendico uses services of CRIF and Austrian Post for identification and credit rating. Right now there are 3 loan listings online.
In the UK 7 innovative finance companies have joined forces and launched the Alternativebusinessfunding.co.uk website to inform SMEs what alternative funding methods they offer. Two p2p lending services Zopa and Funding Circle, two p2p equity (crowdinvesting) services Crowdcube and Seedrs as well as three other services Pension-Led Funding, Platform Black and MarketInvoice participate in this non-bank funders collaberation. These platforms account for 85% of alternative finance for businesses market and have provided more than 580 million GBP to SMEs between them. Screenshot
The information website works like this: 1. Enter the amount of funding you require. 2. After each question you will see the lights change dependant on which funder suits your criteria. 3. At the final question click on any green (or amber) traffic lights for your preferred funder details. 4. All that is left now is for you to approach your funder of choice about sourcing SME finance.
In Australia Reinventure Group, the new WestpacÂ-funded venture capital manager, has invested $5 million in p2p lending service Societyone. Society One, which was founded in August 2012 (see related earlier coverage) by Matt Symons and Greg Symons has originated about 200 loans totalling 4 million AUD. The loan book has doubled in the past six months. Westpac’s VC fund will be joined on the SocietyOne shareholder register by Rocket Internet, which is already funding Lendico, and several local investors including the Australian head of global private equity giant KKR, ÂJustin Reizes, who said he has invested in Society One in a personal capacity.The 8.5 million capital raising will allow Society One to develop new credit products. It recently launched livestock loans and loans tailored for young doctors which are being offered to sophisticated investors through its internet-based platform.
Today Lendico launched its p2p lending service in Poland. Poland is the third market Lendico serves, after Germany and Spain. Loan amounts can be between 1,000 and 50,000 PLN (approx 16,400 US$). Loan terms are from 1 to 5 years and interest rates range from 5.82% to 14.99%. Currently there are 8 open loan listings. Lendico maintains an office in Warsaw. There are already other p2p lending service operating in Poland (e.g. Kokos and Finansowo – which in 2010 merged with Smava Poland).
From the polish press release:
Na polskim rynku finansowym pojawił się nowy gracz: Lendico. To nowoczesna platforma pożyczek społecznościowych, która w bezpieczny sposób łączy pożyczkobiorców z osobami zainteresowanymi korzystną lokatą własnego kapitału. Dzięki temu pozwala uzyskiwać pożyczki na korzystnych warunkach oraz daje perspektywy inwestycji o wysokiej stopie zwrotu. W ten sposób Lendico oferuje produkt niedostępny dla klientów tradycyjnych banków.
