Crowd2Fund Innovative Finance ISA

Crowd2Fund was one of the first peer-to-peer platforms to get regulatory approval for the innovative finance ISA (IFISA). In fact, it received full approval in March 2016, before the IFISA was even officially launched a month later.

The speed at which it received its approval was down to the fact that it had already been authorised by the FCA as far back as October 2014 (the year of its launch), whilst many peer-to-peer lenders still seek approval to this day.

Crowd2Fund ISA Overview

Crowd2Fund operates on the premise of providing investors with better value returns by connecting investors and borrowers directly, and effectively cutting out the banking middleman.

It also works on the principle of making investment products available to the masses, not just the super-rich. Here are some of the things it’s achieved in its few years of existence:

Crowd2Fund IFISA

Crowd2Fund launched its IFISA in April 2016, soon after the product was launched officially by the government, and the firm’s borrowers consist solely of UK businesses.

The ISA lets you invest up to £20,000 in a tax-free wrapper, and has an estimated APR of 8.7 per cent.

There are no fees to open up an account, whilst there is a 1 per cent annual fee on interest and capital payments to the investor. You also face no fees in withdrawing your funds.

How to invest in Crowd2Fund’s IFISA

There’s a pain free process in setting up your IFISA, whereby you must first fill in your name, email address, confirm the country you’re based in, followed by setting up a password.

You must then activate your ISA by confirming your national insurance number, after which you’ll have to option to transfer in any old ISAs you may have, and set up automated investments through ‘Smart-Invest’.

You’ll then be able to view your portfolio, browse investment opportunities and even look at investments available for purchase from other investors. The whole set-up is very engaging and rather good at making the investor feel involved and part of an investment community. This is particularly evident in the social media style layout, much like a social media home page, showing recent investor activity such as who’s joined, who recently invested in what and so on.

 

Register for a Crowd2Fund Account

Automatic diversification

Whilst the investments aren’t automatically diversified, investors have the option to opt-in to the platform’s aforementioned ‘Smart-Invest’ program. Borrowers are chosen based on your desired savings plan as well as your risk appetite. After you choose your investment amounts and desired interest rate, Crowd2Fund will then invest for you.

Secondary market

Crowd2Fund’s secondary market is called ‘The Exchange’. It’s another very engaging part of the website which will allows you to trade your investments to other investors, and means that access to your cash is flexible – depending on whether someone is interested in that particular opportunity.

Those who wish to liquidate their loans early through The Exchange will be at the mercy of the market, meaning a fast sale would require a worse deal on your part.

Security

Crowd2Fund’s has a team of credit analysts reviewing the creditworthiness of businesses before allowing them onto the platform. Additionally, credit reporting agency Equifax checks the risk ratings for each business.

If a business you have invested in fails, there is no regulatory protection from the FSCS, and there is nothing in place to ensure that the company or Crowd2Fund will repay your capital.

Considering investing?

Although there is nothing in place to protect against things such as default or non-repayment, the historic performance of Crowd2Fund’s default rate (0 per cent) is compelling.

However, it is important to note that historical trends are not a good indicator of future performance, and there are still other risks to consider when engaging in peer to peer lending.

For many, peer to peer lending is an exciting opportunity to get involved in stimulating the economy by supporting some interesting small businesses with your investments. From tech firms to quarries, gaming companies to cookery schools – choose what growth you’d like to be a part of and hopefully, reap some great rewards.

Originally Published: Thursday, March 30th, 2017
Updated: Friday, November 30th, 2018

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