Guarantormyloan joins the ranks of the fully authorised peer-to-peer lenders, as the big three saga goes on.
Early-stage consumer lending platform Guarantormyloan has received full authorisation from the FCA. The peer-to-peer platform, which first applied for approval in October 2015, has been operating under interim permission until now.
Guarantormyloan offers loans of up to £5k over terms of 5 years, targeting people with poor or thin credit files. Borrowers will require a guarantor of good standing, typically a homeowner, in order to qualify for a loan. The platform's representative APR is 48.9 per cent. Lenders on the platform may commit between £1k and £10k at a time, for expected returns of between 8 and 10 per cent.
The name of the company behind the Guarantormyloan platform is Match the Cash.
In getting the green light, Guarantormyloan joins a growing cohort of little-known peer-to-peer lenders that the regulator has deemed worthy of full permissions. The group also features early-stage disruptors like business lender Peer Funding and real estate specialist LandLordInvest.
For peer-to-peer lenders, full authorisation is the prerequisite to pursuing ISA manager status. Once authorised, the application process with HMRC is something of a formality. With ISA manager status in hand, peer-to-peer platforms are free to offer the Innovative Finance ISA to investors, meaning that investments will be free of income tax for up to around £15k.
The UK’s “big three” peer-to-peer lenders – Funding Circle, Zopa and RateSetter – continue to await their own shot at the IFISA. Theories about why they haven’t yet been given the thumbs up abound, but the truth is that nobody really knows, thanks to a good deal of caginess on both sides of the process.
Guarantormyloan CEO Rob Udy called the FCA’s decision a “significant milestone” for his business.
“It is important that both customers and lenders have the reassurance of P2P lending in the UK as a genuine, strong and competitive alternative to mainstream, traditional lending which authorisation is an important part of,” he said.