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FOLK2FOLK IFISA to remain P2P focused


Folk2Folk’s Innovative Finance ISA (IFISA) will remain focused on secured peer-to-peer lending investments, despite recent changes to the IFISA remit.

From the 6th April, the IFISA will be extended to cover open-ended property funds and long-term asset funds (LTAFs) in addition to P2P loans. This has led to speculation that some IFISA managers could expand their offerings. However, Roy Warren, managing director of the UK’s largest P2P lender Folk2Folk, says that his platform will stay true to its P2P roots.

“The new rules mean that there will be a greater range of permitted investments beyond P2P lending that can be held within an IFISA which will likely raise the profile of this little- known ISA,” said Warren.

“However, investments into P2P loans will remain the only investment option within Folk2Folk’s IFISA.”

The new ISA rules for 2024 also allow investors to open and contribute to multiple ISAs of the same type within the same tax year, and to make partial transfers between ISA providers where previously they would have had to transfer the full amount. This has fuelled hopes of an influx of new money into IFISAs in the year ahead.

Folk2Folk has in excess of £60m invested via its IFISA, with a current interest rate starting from 8.75 per cent per annum.

“We have seen steady growth in our IFISA since its inception, reflecting strong investor confidence in our platform and the quality of the loans we facilitate,” says Warren.

“Competitive returns and a focus on secured lending has helped us maintain an attractive proposition for investors seeking to balance risk and reward.”

Folk2Folk’s IFISA investments are used to fund regional UK businesses, creating jobs, building homes and supporting local economies at a time when traditional bank lending has been constrained.

“By providing a platform for investors to lend directly to businesses, we’ve facilitated in excess of £674 million in funding to small- and medium-sized enterprises (SMEs) across the country,” says Warren.

“The positive impact of these investments contribute to the economic recovery our country needs.”

In his Spring Budget, the Chancellor also proposed a British ISA, which would give investors an extra £5,000 allowance to invest in UK shares on top of the current £20,000 ISA allowance. Warren says that this is a clear move by the government to encourage greater investment in UK-listed businesses. However, he points out that Folk2Folk’s IFISA is currently performing the same function for unlisted SMEs.

“Both the Folk2Folk IFISA and the British ISA support British businesses, but a key difference is that Folk2Folk’s IFISA channels investment into unlisted SMEs, enabling our investors to have a positive impact on small and medium sized businesses not large enough to be listed on the London Stock Exchange.”

Warren says that feedback received from Folk2Folk’s IFISA investors via a recent survey was “overwhelmingly positive.”

“They appreciate the combination of tax efficiency, competitive returns, and the tangible impact their investments have on UK businesses and communities,” he says.

“Investors are pleased with the ease of use of our platform and the personalised service they receive from our team. However, we also listen carefully to suggestions for improvement, and we’re committed to continually enhancing our offerings and the investor experience.”

This article was initially published by Alternative Credit Investor in April 2024 and can be viewed here.

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