Folk2Folk touts “Local” ISA, allowing investors to back local businesses tax-free.
Folk2Folk, a peer-to-peer lender that's renowned for operating a branch network, has launched its Innovative Finance ISA. The company is touting the new wrapper as a “Local” ISA – in that it gives investors the chance to back British businesses in their local area, while earning tax-free returns.
Folk2Folk was authorised by the FCA in December of last year, paving the way for the launch of its IFISA. Investors in the new product will be looking at either 5.5 or 6.5 per cent per annum, depending on the term of their investment.
The “Local” ISA is only available to existing investors at present. New lenders will be able to access the wrapper from 1st August, and may register their interest now. The platform will soon begin accepting “transfers in” of funds held with other providers.
Folk2Folk’s minimum investment amount of £20,000 means that investors will be forced to use their full ISA allowance in order to take advantage of the new product.
“The launch of our IFISA comes at a time when investors are starved for yield, with most interest rates set well below inflation,” said Jane Dumeresque, CEO of Folk2Folk. “At FOLK2FOLK we’re able to offer consumers an alternative income opportunity; one that now provides welcome tax-free interest earned through the ISA wrapper. We believe our IFISA returns will not only offer a source of monthly income for investors, enabling them to support their lifestyles and achieve their financial goals but also encourage more people to support and lend to local UK businesses.”
Folk2Folk’s branch-based version of the standard P2P model is the main reason for its strong focus on local ties. At inception, the the company was wholly focused on funding Cornish businesses. It has gradually crept across the South West since, opening branches in each new region that it enters.
The firm has set itself the lofty goal of facilitating £1bn in cumulative lending by 2020. Its "Local" ISA should prove an important stepping-stone en route to reaching the milestone.