Zopa, Funding Circle and RateSetter may be absent from this year’s ISA season, but investors still have plenty of choice if they want tax-free returns from their peer-to-peer lending.
Before the pandemic, the so-called big three P2P lenders – Zopa, Funding Circle and RateSetter – would have dominated the Innovative Finance ISA (IFISA) market.
But over the past year, RateSetter exited the industry after being acquired by Metro Bank, Zopa shut down its P2P arm to focus on banking, and Funding Circle is focusing on its stimulus lending program for now. .
Even without the big three, investors can still earn decent returns on their P2P loans and gain exposure to a variety of investments.
Here are some of the IFISA options available to P2P investors from leading industry platforms.
Assetz Capital – Supporting an established platform
Commercial and property lender Assetz Capital has a loan portfolio worth £1.4 billion, making it the largest P2P lender currently active.
It is also one of the most established players, having launched in 2013.
Investors can earn 4.33% from its manual loan accounts depending on the target rate and expected defaults, according to P2P analyst 4th Way.
LandlordInvest – High Rates
P2P property lender LandlordInvest has only been around since 2017 and its loan portfolio is worth £13.5billion.
It offers some of the most attractive IFISA rates on the market, with yields of 10.84% after bad debt, according to 4th Way.
CrowdProperty – Invest in home loans
With a loan portfolio worth £185m, CrowdProperty manages to rank among the largest P2P lenders.
It offers development and transition loans that you can select manually or have your money invested and diversified automatically
The platform offers an IFISA rate of 7.63% after bad debts, according to data from 4th Way.
Abundance Investment – Go Green
Investors can support green and renewable projects through the Abundance equity bond platform.
Investors have backed £122m worth of projects, including local council community municipal bonds.
Returns on many of his projects can also be earned tax-free, but the rate will depend on the individual investment.
Lendwise – Investing in Education
Lendwise launched the first education-backed IFISA last month.
It targets returns of between 4% and 12%, with a minimum investment of £1,000.
All of IFISA’s investments will fund the platform’s student loans, which are primarily used by postgraduate students looking for a fixed rate loan to fund their education. Loan repayments generally begin six months after graduation.
Finance Ourselves – Repay Consumer Loans
Zopa and Lending Works’ exit from P2P lending means there’s not much choice if you want to back consumer lending through an IFISA.
Fund Ourselves is one of the few remaining consumer players with an IFISA.
It offers targeted returns of up to 15% to secure its short-term loans.