LendingCrowd launches first tax-free savings account

Edinburgh-based LendingCrowd has announced plans to launch its own ISA following a record year for the alternative finance firm.

Chief executive Stuart Lunn said the firm’s tax-free savings vehicle would be one of the first in the peer-to-peer (P2P) lending sector as aims to take advantage of changes introduced by the UK Government last year.

LendingCrowd, which connects investors with small and medium-sized companies typically seeking loans of between £5,000 and £250,000, recently said it had achieved a return of 8.1 per cent over the past 12 months.

The peer-to-peer lender, which uses cash invested by users of its site to lend to small businesses, said it will begin offering the product as soon as it receives approval from HMRC.

Mr Lunn, who founded to the company in 2014 with and chairman Bill Dobbie, said: “While we are not the biggest P2P platform in the UK, the investment made in our people and technology combined with the Financial Conduct Authority (FCA) approval has positioned LendingCrowd right at the front of the market when it comes to alternative financing of UK SMEs.

“We intend to build on this position of strength in 2017, continue to innovate for the benefit of our clients and will be updating the market on plans to launch our ISA during Q1.”

Since launching in 2014, LendingCrowd has facilitated loans totalling more than £9 million and has some 2,000 investors signed up to its platform.

LendingCrowd’s business works by providing loans that can be made up of small sums from hundreds of investors.

Since its launch, LendingCrowd has seen more than £9 million loaned via its site, with more than 2,000 investors currently using the platform.

Loans are typically in the region of £20,000 to £1 million, although one deal helped DietChef complete one of the largest ever P2P deals seen in the UK in a £1.5 million debt finance transaction.

In November, LendingCrowd became the first P2P lender to SMEs to move from interim to full authorisation from the FCA. The move paved the way for the launch of the new ISA product announced this week.

While LendingCrowd said its ISA will accept lump-sum investments from launch, Mr Lunn said it is looking to add the function for regular investments in due course.

“We have the mechanism to be able to invest periodically but we haven’t decided whether we will have that from launch or not,” he said. “We will certainly have the ability to offer that at some stage.”

LendingCrowd recently partnered with the Scottish Investment Bank (SIB), the investment arm of Scottish Enterprise, in an initiative that will see £2.75m invested in Scottish SMEs across the LendingCrowd platform.

It is expected that the move will stimulate loans of up to £35 million for SMEs while leveraging significant private sector investment.

Latest figures show the UK alternative finance sector provided £3.2 billion worth of funding in 2015, up 84 per cent on 2014.