Frequently Asked Questions

GENERAL

What is crowdfunding/P2P lending?

Crowdfunding, which is also referred to as peer-to-peer (P2P) in the context of lending, is the process of raising money – "funds" - directly from "the crowd". Typically, a large number of people each contribute a small sum of money.

What is Money&Co.?

We are a P2P lending platform, regulated and authorised by the UK's leading regulatory body, the Financial Conduct Authority. Money&Co.'s CEO is Nicola Horlick, a well-known investment manager. Money&Co. was founded in 2013 to help British businesses to borrow to help finance growth, and to provide lenders with a good return on their money.

What are the risks of being a lender?

When you lend to a small or medium-sized business, you inevitably take on risk. While we do extensive credit analysis of businesses seeking funds, it is possible that a business may fail. In that case, you may lose all or part of the money you have loaned to the business. Your capital is at risk, as is the income you would have been entitled to. There are other risks associated with making fixed-rate, fixed-term loans. You may find that your money could earn a better rate of return elsewhere because interest rates have risen significantly but your money is locked in (interest-rate risk). If you decide you need to realise the cash lent through Money&Co., you may find that you cannot sell your loan at a price you are happy with (there is no guarantee of finding a buyer). You may have no choice but to hold a loan because the borrower has missed a payment and you are not allowed to sell in the loan market when this happens (liquidity risk).

What do the credit ratings mean?

The credit ratings given for each loan equate to the relative risk of lending to each business (A+ the lowest risk, C+ the highest risk). The indicative interest rate for each credit rating is given below. This represents what we believe is a broadly appropriate interest rate for each category (these represent a gross rate, and do not account for Money&Co.'s fee for lending). We stress this is a set of indicative rates. These indications should not in any way be construed as advice. A+: 7% A: 8% B+: 9% B: 10% C+: 11%

How is Money&Co. regulated?

We are a P2P lending platform and we are regulated by the UK's leading regulatory body, the Financial Conduct Authority.

Is Money&Co. a member of the UK Crowd Funding Association (UKCFA)?

Yes. We have signed up to the UKCFA's code of conduct, as evidenced by the black UKCFA icon on our website. We are audited by the UKCFA annually to ensure that we adhere to best practices of fairness and transparency in the industry.

Why does membership of the UKCFA make a difference?

It shows that, along with the highest levels of legal and regulatory obligation as required by the FCA, we have voluntarily adopted the best practices in the industry.

Will I be covered by the Financial Services Compensation Scheme if I invest with Money&Co.?

P2P loans are specifically excluded from the Financial Services Compensation Scheme. However, as a Money&Co. Portfolio client, your money will be managed by Bramdean Asset Management LLP, which is a fund management company regulated by the FCA. As such, it is covered by the Financial Services Compensation Scheme. Please note that the maximum cover for fund management businesses is £50,000 and that the scheme does not cover investment losses.

Is the Money&Co. website available in large-print, Braille or audio/screen-reader versions?

Most computer operating systems allow you to zoom in (see "View" on your screen) and have a read-text function. We are working on a Braille function.

How secure is the Money&Co. website?

Our IT infrastructure is hosted by a leading global IT hosting company that ensures physical and operational security of our systems and data, and has been certified as ISO 27001/2 compliant annually. We also ensure all website traffic is secured by 2048-bit encryption. Our Barclays and Barclaycard banking and payment platforms conform to similarly high standards of security protocol. Please remember that the money in your account is held in the same way that a bank would hold money on your behalf and so it is essential that you do not give your username or password to anyone else.

How safe is my personal information?

Your personal information is very safe, but please ensure that you do not give your username or password to anyone else.

Who actually stores my information?

The information that you have given us is held on Money&Co.'s systems, and is not available to anyone else as you are protected by UK Data Protection legislation.

As a Money&Co. Portfolio client, can I view my portfolio online?

Yes, we will provide you with a login and you will be able to view your portfolio and the transactions. You will also be able to get any information needed for tax returns.

What can I do if I want to make a complaint?

You should visit "Complaints" and initiate the complaints procedure. We adhere to best practice, and will deal with complaints fairly and promptly.

RISK

What are the risks of being a lender?

When Bramdean lends to a small or medium-sized business on your behalf, you inevitably take on risk. While we make diligent enquiries of the businesses seeking funds, it is possible that a business may fail. In that case you may lose all or part of the money you have loaned to the business.

What is the estimated default rate for borrowing companies?

Borrowing companies that pass the Money&Co. credit-rating test are given one of five credit ratings (A+, A, B+, B, C+). A+ is the "best" rating, for companies deemed the most credit-worthy. Below we set out the estimated rate of default, according to credit rating. The riskiest category projects capital losses equivalent to the failure of three companies in 200, and the A+ category projects the equivalent of the failure of just one company in 200.You should be aware that if a company fails your capital is at risk.

Estimated Bad-Debt Rate Per Annum

A+ 0.5%

A 0.75%

B+ 1.0%

B 1.25%

C+ 1.5%

What legal rights and protections do I have as a lender?

There are no special protections for lenders. Lending to businesses does not necessarily have the rights, privileges and protections that apply to consumer-finance transactions. Although currently all of the loans offered by Money&Co. will fall outside the protection of the Financial Conduct Authority (FCA)'s Financial Services Compensation Scheme, we are regulated by the FCA, and treat lenders and borrowers according to the highest standards. Bramdean is a fund management business regulated by the FCA and is covered by the Financial Services Compensation Scheme. The maximum level of compensation for clients of a regulated fund management business is £50,000. Please note that the scheme does not cover investment losses.

Why do I need to read the Lender Terms?

You should read the Lender Terms because they set out the risks inherent in making a loan to a Money&Co. borrower. Even as a Money&Co. Portfolio client where Bramdean is making investments on your behalf, you need to be fully appraised and aware of these risks before lending.

How is Money&Co. regulated?

We are a P2P lending platform and are regulated and licensed by the UK's leading regulatory body, the Financial Conduct Authority.

Is Money&Co. a member of the UK Crowd Funding Association (UKCFA)?

Yes. We have signed up to the UKCFA's code of conduct, as evidenced by the black UKCFA icon on our website. We are audited by the UKCFA annually to ensure that we adhere to best practices of fairness and transparency in the industry.

Why does membership of the UKCFA make a difference?

It shows that, along with the highest levels of legal and regulatory obligation as required by the FCA, we have voluntarily adopted the best practices in the industry.

Am I protected if Money&Co. goes into administration?

Our regulatory and legal obligations, as required by the FCA, and the UKFCA code of practice, all require Money&Co. to keep lenders' money separate from the company's money. A similar rule applies to the funds held by investee companies. If Money&Co. goes into administration you will be able to claim these separately held monies.

Am I protected if the company I invest in goes into administration?

As a lender, your money is always at risk. If the business you invested in goes into administration you may lose some or all of your investment as the liquidators of the company sell its assets and distribute the cash to you and other creditors of the business. You are a secured creditor because we always take a debenture charge over the borrowing company's assets. A debenture is a way of asserting a claim over assets if things go wrong. It is likely that there may be other secured creditors who get paid before you, but you are likely to recover more of your capital than general, unsecured creditors. This is why a loan secured by a debenture offers better security than a loan secured on a director's personal guarantee. Holders of such loans rank as unsecured general creditors in the event of the borrower's going into liquidation.

What does Money&Co.'s credit rating mean?

When a company comes onto the site and applies for a loan, our credit analysts attribute a credit rating. The credit scale is alphabetical: A+ is the highest, with C+ the lowest. Thus a company with a rating of A+ will, in our credit-assessment team's judgment, be less risky than a borrowing company with a rating of B+. We are taking a conservative approach and will only approve loans to companies that are reasonably strong financially. Within this group of companies, however, some will be stronger than others and the credit rating will provide guidance to lenders in terms of what rate they should ask for on their money and how likely or not it is that a company might default on loan repayments. Companies that are weaker financially will be expected to pay a higher rate of interest. This may sound counter-intuitive, but that is how credit markets work.

How is the Money&Co. credit rating calculated?

Money&Co. has a sophisticated credit-rating process, which is difficult to describe in a few words. However, the key element is that the companies must have three years of filed accounts and must be profitable in the last financial year. We are looking for companies that have stable or growing profitability. When Money&Co. is assessing a project for a property business, it may lend through a special purpose vehicle that has no past accounts or financial history. In this circumstances, our credit team will be evaluating the skills of the property company's team, and their past performance.

What happens if a business I lend to misses a repayment?

You will receive an email alert. The Money&Co. credit-control team will chase payment for you in this (we very much expect) unlikely event. There is no need for you to contact directly the business you've loaned money to.

How secure is the Money&Co. website?

Our IT infrastructure is hosted by a leading global IT hosting company that ensures physical and operational security of our systems and data, and has been certified as ISO 27001/2 compliant annually. We also ensure all website traffic is secured by 2048-bit encryption. Our Barclays and Barclaycard banking and payment platforms conform to similarly high standards of security protocol. Please remember that the money in your account is held in the same way that a bank would hold money on your behalf and so it is essential that you do not give your username or password to anyone else.

How safe is my personal information?

Your personal information is very safe, but please ensure that you do not give your username or password to anyone else.

Who actually stores my information?

The information that you provide to us is held on Money&Co. servers, and access to it is restricted and audited. We may share your information with partners when it is necessary in order to provide our service to you. We do not share your information for any other purpose.

LENDER

Why do I need to read the Lender Terms?

You should read the Lender Terms because they set out the risks inherent in making a loan to a Money&Co. borrower. Even as a Money&Co. Portfolio client, where Bramdean Asset Management LLP (“Bramdean”) will be making lending decisions on your behalf, you need to be fully appraised and aware of these risks before lending.

What are the risks of being a lender?

When you lend to a small or medium-sized business, you inevitably take on risk. While we do extensive credit analysis of businesses seeking funds, it is possible that a business may fail. In that case, you may lose all or part of the money you have loaned to the business. Your capital is at risk, as is the income you would have been entitled to. Money&Co. will seek to recover any bad debts but will not provide any compensation in the event that this is unsuccessful. There are other risks associated with making fixed-rate, fixed-term loans. You may find that your money could earn a better rate of return elsewhere because interest rates have risen significantly but your money is locked in (known as interest-rate risk). If you decide you need to realise the cash lent through Money&Co., you may find that you cannot sell your loan at a price you are happy with (there is no guarantee of finding a buyer). You may have no choice but to hold a loan because the borrower has missed a payment and you are not allowed to sell in the loan market when this happens (known as liquidity risk).

Am I protected if Money&Co. goes into administration?

Our regulatory and legal obligations, as required by the FCA, and the UKCFA code of practice, all require Money&Co. to keep lenders' money separately. A similar rule applies to the funds held by investee companies. If Money&Co. goes into administration you will be able to claim these separately held monies.

Am I protected if the company I lend to goes into administration?

As a lender, your money is always at risk. If the business you invested in goes into administration you may lose some or all of your investment as the liquidators of the company sell its assets and distribute the cash to you and other creditors of the business. You are a secured creditor because we always take a debenture charge over the borrowing company's assets. A debenture is a way of asserting a claim over assets if things go wrong .It is likely that there may be other secured creditors who get paid before you, but you are likely to recover more of your capital than general, unsecured creditors. This is why a loan secured by a debenture offers better security than a loan secured on a director's personal guarantee. Holders of such loans rank as unsecured general creditors in the event of the borrower's going into liquidation.

How do I sign up as a Money&Co. Portfolio client?

Select which service you would like to subscribe for and fill in the form online. We will then contact you and assist in completing the client take-on process.

Are my details visible to the borrower / others if I bid?

Yes. Live bids placed on your behalf by Bramdean are visible to the businesses seeking funding. Money&Co. does not do 'blind' auctions.

Is there a maximum or minimum amount I can lend?

There's no maximum, other than the amount the borrowing business is seeking. The minimum investment for the Money&Co. Managed ISA is £1,000. The minimum for the Money&Co. Portfolio Service is £50,000 and the minimum for the Money&Co. Inheritance Tax Service is £150,000.

As a lender will I have a stake in the company I'm giving money to?

No. Your loan earns you interest and capital repayments over a certain period, subject to the borrower meeting commitments to pay these amounts. You will not own shares in the company.

What kinds of loans are on offer?

Simple, fixed-rate loans: Bramdean will bid on your behalf to provide funds at a certain rate for the duration of the loan term. If your bid is accepted into the final loan sum, that's what you get.

Can I be a lender if I don't live in the UK?

Yes, but the client take-on process is more complicated if you live outside the UK.

What does the "loan market" mean?

If you instruct Bramdean to liquidate some or all of your loan portfolio, loans will be placed in the loan market. The loan market allows other lenders to purchase your loans. We charge 0.25% commission on all sales to the seller. Please note that there is no guarantee that you will be able to sell your loan.

Can I sell my live loans at any time?

Yes, if you can find a buyer in the loan market and the loans have a perfect repayment history. However, if your loans have had one or more repayments missed, you will not be able to sell them and you will have to hold them for the full term.

What does selling at a premium or discount mean?

Selling at a premium means you're getting more money back on the amount of the loan left to be repaid, than you would if you did not sell the right to be repaid to a new lender. Premium sales will typically occur if interest rates go down, and credit becomes cheap. Selling at a discount is the other side of that coin. You sell the right to receive income from a business to a new lender, and you receive less money than the amount left to be repaid on the loan.

What does Money&Co.'s credit rating mean?

When a company comes onto the site and applies for a loan, our credit analysts attribute a credit rating. The credit scale is alphabetical: A+ is the highest, with C+ the lowest. Thus a company with a rating of A+ will, in our risk-assessment team's judgment, be less risky than a borrowing company with a rating of A or B+. We are taking a conservative approach and will only approve loans to companies that are reasonably strong financially. Within this group of companies, however, some will be stronger than others and the credit rating will provide guidance to lenders in terms of what rate they should ask for on their money and how likely or not it is that a company might default on loan repayments. Companies that are weaker financially will be expected to pay a higher rate of interest. This may sound counterintuitive, but that is how credit markets work. It is very important that you spread the money that you are lending across as many companies as possible in order to minimise any losses that might occur as a result of bad debts.

How do I track the progress of my loans?

When you become a Money&Co. Portfolio client, we will give you a login so that you can access information about your loan portfolio.

Once I've made a loan, how often will I receive interest payments?

For fixed-term loans, the borrower will pay interest every six months and then repay all of the capital at the end of the term of the loan. Money&Co. deducts its annual fee of 1% from borrower payments and so you receive interest payments net of our fee.

When do I get my capital back?

You will get your capital back at the end of the term of the loan, which is typically five years.

What happens if Bramdean enters a bid on my behalf and the company doesn't raise all the money it wants?

If the company doesn't raise all the money, then nothing will be lent. The company will have the option to come back onto the site and ask for a smaller amount.

What are the costs of lending through Money&Co.?

We will charge you 1% per annum on all the amounts that you lend. This will be deducted from the interest repayments that you will receive six-monthly. Thus, the amounts that you will receive will be net of our fees.

How does the loan auction work?

When a company has been apaproved and a credit rating attributed, then the auction will go live. Bramdean will decide whether to make a bid on your behalf based on the parameters agreed when you became a Money&Co. Portfolio client. Once the loan has been filled, the loan will be added to your portfolio.

What due diligence does Money&Co. undertake on borrowers?

Money&Co. undertakes credit analysis on borrowers. Borrowers must have at least three years of filed accounts before Money&Co. will even consider approving them. Companies that have seen a sharp decline in profits or which are loss-making will not be approved. Profitability must be steady or rising in order to gain credit approval.

How is the Money&Co. credit rating calculated?

Money&Co. has a sophisticated risk-rating process, which is difficult to describe in a few words. However, the key element is that the companies must have three years' of filed accounts and must be profitable in the last financial year. We are looking for companies that have stable or growing profitability.

Are loans guaranteed or secured?

Loans are not guaranteed to be repaid by Money&Co., and so lenders must understand that their capital is potentially at risk. Loans will often be secured on the assets of the company or may carry a personal guarantee from the owner of the business. This will provide some protection if the company defaults on loan repayments.

What are the income tax implications of lending through Money&Co.?

The interest you receive is income, and income tax is payable on that interest unless your loans are held in an Innovative Finance ISA. Please note that we do not deduct tax from the income generated by your loans and so you must declare all income received to HMRC annually. You will be able to see the amount of interest that your portfolio has generated during each tax year on the website. The capital you advance will simply be returned to you during the life of the loan, as long as the borrower makes all repayments owed to you. This will not be a capital gain, and will not be subject to Capital Gains Tax.

What happens if a business I lend to misses a repayment?

Money&Co. will immediately contact the borrower and try to retrieve the payment. If the company is in financial difficulty, Money&Co. may agree different repayment terms. If the company goes into administration, Money&Co. will attempt to get full repayment of any outstanding amounts through calling on security held.

Can a business repay a loan early?

Yes. Borrowers can repay outstanding capital and interest at any time without penalty. Bramdean, acting on your behalf, will then reinvest the proceeds in another loan taking account of the investment parameters agreed at the time that you became a Money&Co. Portfolio client.

PORTFOLIO INNOVATIVE FINANCE ISA

What is an ISA?

ISA stands for Individual Savings Account. Investments within an ISA account do not attract tax. This means that any income generated by loans held within your ISA will be tax-free and if you sell an investment within the account and make a capital gain, no tax will be payable, even if you have already used your capital gains tax allowance for that tax year.

What is an Innovative Finance ISA (IFISA)?

IFISA stands for Innovative Finance Individual Savings Account. The IFISA was introduced on 6 April 2016. Previously, there were two types of ISA: the Cash ISA and the Stocks and shares ISA. The IFISA allows savers to hold peer-to-peer (P2P) loans (including loans made to businesses) and cash in an ISA wrapper. This means that any interest earned on your loan portfolio will be tax-free.

Who can invest in an IFISA?

Anyone who is over 18 years-old, and who is resident in the UK (which excludes the Channel Islands and the Isle of Man) for tax purposes. If you are working overseas, but work for the Crown or are on active service, you will be treated as being resident. If you are the spouse or civil partner of someone who is working for the Crown overseas, you will also be treated as being resident.

What is the Money&Co. Portfolio Innovative Finance ISA?

This is an IFISA, but you do not have to select the loans yourself. They will be selected by Bramdean Asset Management LLP (Bramdean), which is an FCA-regulated fund management company.

How can I apply for a Money&Co. Portfolio Innovative Finance ISA?

You can fill in the form online or you can print the form and fill it in by hand. You can also apply by telephone. All IFISA forms must be signed. So if you apply online or by telephone, we will send you the printed form, which you must sign and return to us within 30 calendar days of making the application. If you spot any mistakes on the form, please correct them and initial where you have made the change. Your form should be posted back to us using the address FREEPOST Money&Co.

What happens if I decide to go and live overseas permanently and I am not working for the Crown?

You can keep the investments that you hold in your Money&Co. Portfolio Innovative Finance ISA account, but you will not be able to make further subscriptions.

You ask for my National Insurance number on the application form. What happens if I don't have one, or if I have a temporary one?

If you don't have a National Insurance number or if you have one in an old format or a temporary one, you will still be able to invest in a Money&Co. Portfolio Innovative Finance ISA, but we need to establish that you definitely do not have a National Insurance number in the modern format.

What happens if I am resident in a care home or am a traveller?

Those living in a care home or who have no permanent address because they are travellers can invest in a Money&Co. Portfolio Innovative Finance ISA.

What happens if I move house?

You must inform Money&Co. of your new address as soon as possible.

What happens if I change my name?

You must inform Money&Co. of your new name as soon as possible.

Can a third party apply for a Money&Co. Portfolio Innovative Finance ISA on my behalf?

Yes, but you must sign the application form yourself.

What happens if I am not able to sign my Money&Co. Innovative Finance ISA application form?

You must sign your own application form. If you are incapable of signing the application form and a valid Power of Attorney is held by someone else, then that person will be able to sign the form on your behalf. If your Financial Adviser is making an application on your behalf, he/she will not be able to sign the application form. You must do this yourself.

What is the minimum investment in a Money&Co. Portfolio Innovative Finance ISA?

The minimum investment for the Money&Co. Portfolio Innovative Finance ISA is £1,000.

What happens if I change my mind after my Money&Co. Innovative Finance ISA application has been accepted?

If you change your mind and your Money&Co. Innovative Finance ISA subscription is still in cash, you can cancel or transfer your IFISA to another ISA provider. If Bramdean has already bought a loan or loans for your account, these will have to be sold before you can cancel or transfer your IFISA account.

Can I hold my Money&Co. Portfolio Innovative Finance ISA jointly with someone else - such as my spouse or civil partner?

No. Your IFISA must be held in your own name only. Your spouse or civil partner can have his or her own IFISA account, but the money subscribed must be the individual's own money.

What other restrictions apply to the IFISA?

Under the ISA regulations, you can only buy one IFISA in each tax year. So if you apply for a Money&Co. Portfolio Innovative Finance ISA for the current tax year, you cannot buy additional IFISAs through any other platform. You are allowed to buy a Cash ISA and/or a Stocks and Shares ISA during the same tax year, but you must not exceed your overall ISA allowance.

What happens if I exceed my annual ISA allowance by mistake?

All ISA managers are required to report the subscriptions they have received during the tax year to HMRC. If it becomes apparent that you have exceeded your ISA allowance for the previous tax year, the HMRC will require the situation to be rectified by the cancelling of the last ISA that you bought. HMRC will give guidance to the ISA manager involved and will also inform you of what needs to be done.

What will happen to the interest from the loans held in my Money&Co. Portfolio Innovative Finance ISA?

You have the choice between reinvesting the interest in new loans within your IFISA account or paying the interest to your clearing bank account bi-annually. No tax will be payable on the interest from your loan portfolio.

What level of income can I expect from my Money&Co. Portfolio Innovative Finance ISA?

Money&Co. will be offering fixed-term loans to include in your Money&Co. Portfolio Innovative Finance ISA. At the time of writing, we would expect the average gross yield to be 8 per cent. Money&Co. takes a fee of 1 per cent per annum. This means that the net yield that you will receive will be 7 per cent per annum. If you invest £10,000, you will get £700 per annum of interest and over the three-year period of the loan, you will get £2,100. No tax will be payable, and you can choose to have the interest paid to your clearing bank account bi-annually or keep it in your account for reinvestment.

Will I earn interest on cash held in my Money&Co. Innovative Finance ISA account?

No interest is payable on cash held in your IFISA account.

What happens if something goes wrong with a loan in my Money&Co. Innovative Finance ISA account?

If something goes wrong with the underlying company that has taken the loan, Money&Co. will move to enforce the security held. If the security is property, the property will be sold and the proceeds will be paid to Lenders, which may include IFISA holders. However, although Money&Co. always takes some security from Borrowers, there is still a risk that you might lose some of your capital if we are not able to achieve a good price when the asset is sold. If you do lose some of your capital, you will not be able to offset this loss against any gains outside your IFISA portfolio.

What happens when a loan in my portfolio matures?

When a loan matures, the capital will be repaid and this will become cash in your Money&Co. Portfolio Innovative Finance ISA account. Bramdean will then reinvest the cash within the parameters agreed when you signed up as a Money&Co. Portfolio client.

What will happen to my Money&Co. Portfolio Innovative Finance ISA when I die?

When an IFISA holder dies, Money&Co. is required by HMRC to remove the ISA wrapper from the date of death. This means that any interest earned after the date of death will be subject to tax. However, it may be that the surviving spouse or civil partner will be entitled to make an Additional Permitted Subscription. Money&Co. accepts Additional Permitted Subscriptions, even if the person making that subscription does not already have a Money&Co. Portfolio Innovative Finance ISA account.

What will happen to my Money&Co. Innovative Finance ISA if I am declared bankrupt?

If you are declared bankrupt, a Trustee will be appointed and he/she will have the power to direct that your Money&Co. Portfolio Innovative Finance ISA account be closed and the proceeds of sale of your loans be paid out.

Is the Money&Co. Portfolio Innovative Finance ISA flexible?

All Money&Co. IFISAs are flexible. This means that we will treat any new subscription for the current tax year as being net of any income paid out from your existing loan portfolio held in your IFISA. If you are applying for a new IFISA this will not be relevant to you initially, but will apply in future tax years.

Can I transfer an existing ISA to Money&Co. ?

Yes, you can transfer a Cash ISA, a Stocks and Shares ISA or an Innovative Finance ISA currently with another provider to Money&Co. Fill in the Money&Co. Portfolio Innovative Finance ISA application form and tick the box telling us that you are looking to transfer from another ISA manager.

Can I transfer my Money&Co. Portfolio Innovative Finance ISA to another ISA manager?

Yes. The new ISA manager will contact us and we will arrange to sell the loans in your account. This may take some time and will depend on demand in the loan market.

Can I close my Money&Co. Portfolio Innovative Finance ISA account?

Yes, you can close your IFISA account at any time. We can send any cash in your account to your clearing bank and then sell your loans in the loan market. However, it may take some time to sell your loans. If you close your IFISA account, you will lose the tax benefits for the previous tax years that you made subscriptions. You will be able to make future subscriptions to a Money&Co. Portfolio Innovative Finance ISA, but you will have to open a new account and those subscriptions will count as being for the tax year in which they are made.

PORTFOLIO SERVICE

What is the Money&Co. Portfolio Service?

The Money&Co. Portfolio Service allows you to invest in loans orginated by Money&Co. using the services of a professional fund manager. Bramdean Asset Management LLP (Bramdean) will manage your portfolio within the parameters agreed when you become a client. Unlike other lenders, you will not have to make decisions about which loans to buy and participate in the auctions. Bramdean will do this for you.

What is the minimum investment for the Money&Co. Portfolio Service?

The minimum investment for the Money&Co. Portfolio Service is £50,000.

When I become a Money&Co. Portfolio Service client, do I need to read the Lender Terms?

You should read the Lender Terms because they set out the risks inherent in making a loan to a Money&Co. borrower. Even as a Money&Co. Portfolio Service client, where Bramdean will be making lending decisions on your behalf, you need to be fully appraised and aware of these risks before lending.

What are the risks of being a lender?

When you lend to a small or medium-sized business, you inevitably take on risk. While we do extensive credit analysis of businesses seeking funds, it is possible that a business may fail. In that case, you may lose all or part of the money you have loaned to the business. Your capital is at risk, as is the income you would have been entitled to. Money&Co. will seek to recover any bad debts but will not provide any compensation in the event that this is unsuccessful. There are other risks associated with making fixed-rate, fixed-term loans. You may find that your money could earn a better rate of return elsewhere because interest rates have risen significantly but your money is locked in (known as interest-rate risk). If you decide you need to realise the cash lent through Money&Co., you may find that you cannot sell your loan at a price you are happy with (there is no guarantee of finding a buyer). You may have no choice but to hold a loan because the borrower has missed a payment and you are not allowed to sell in the loan market when this happens (known as liquidity risk).

How do I sign up as a Money&Co. Portfolio Service client?

Fill in the form online. We will then contact you and assist in completing the client take-on process.

Are my details visible to the borrower if Bramdean makes a bid on my behalf?

Yes. Live bids placed on your behalf by Bramdean are visible to the businesses seeking funding. Money&Co. does not do 'blind' auctions.

As a lender will I have a stake in the company I'm giving money to?

No. Your loan earns you interest and capital repayments over a certain period, subject to the borrower meeting commitments to pay these amounts. You will not own shares in the company.

What kinds of loans are on offer?

Simple, fixed-rate loans: Bramdean will bid on your behalf to provide funds at a certain rate for the duration of the loan term. If your bid is accepted into the final loan sum, that's what you get.

Can I be a lender if I don't live in the UK?

Yes, but the client take-on process is more complicated if you live outside the UK.

What does the "loan market" mean?

If you instruct Bramdean to liquidate some or all of your loan portfolio, loans will be placed in the loan market. The loan market allows other lenders to purchase your loans. We charge 0.25% commission on all sales to the seller. Please note that there is no guarantee that you will be able to sell your loan.

Can I sell my live loans at any time?

Yes, if Bramdean can find a buyer in the loan market and the loans have a perfect repayment history. However, if your loans have had one or more repayments missed, you will not be able to sell them and you will have to hold them for the full term.

What does selling at a premium or discount mean?

Selling at a premium means you're getting more money back on the amount of the loan left to be repaid, than you would if you did not sell the right to be repaid to a new lender. Premium sales will typically occur if interest rates go down, and credit becomes cheap. Selling at a discount is the other side of that coin. You sell the right to receive income from a business to a new lender, and you receive less money than the amount left to be repaid on the loan.

What does Money&Co.'s credit rating mean?

When a company comes onto the site and applies for a loan, our credit analysts attribute a credit rating. The credit scale is alphabetical: A+ is the highest, with C+ the lowest. Thus a company with a rating of A+ will, in our risk-assessment team's judgment, be less risky than a borrowing company with a rating of A or B+. We are taking a conservative approach and will only approve loans to companies that are reasonably strong financially. Within this group of companies, however, some will be stronger than others and the credit rating will provide guidance to lenders in terms of what rate they should ask for on their money and how likely or not it is that a company might default on loan repayments. Companies that are weaker financially will be expected to pay a higher rate of interest. This may sound counterintuitive, but that is how credit markets work. It is very important that you spread the money that you are lending across as many companies as possible in order to minimise any losses that might occur as a result of bad debts.

How do I track the progress of my loans?

When you become a Money&Co. Portfolio Service client, we will give you a login so that you can access information about your loan portfolio.

How often will I receive interest payments from my portfolio?

Typically the loans within your portfolio will generate interest payments every six months. You can choose to either have interest paid out to your clearing bank every six months, or leave the income from your loans in your portfolio for reinvestment by Bramdean.

When do I get my capital back?

You will get you capital back at the end of the term of each loan within your portfolio. Bramdean will then reinvest the capital into new loans in line with the agreed parameters.

What happens if Bramdean enters a bid on my behalf and the company doesn't raise all the money it wants?

If the company doesn't raise all the money, then nothing will be lent. The company will have the option to come back onto the site and ask for a smaller amount.

What are the costs of lending through Money&Co.?

We will charge you 1% per annum on all the amounts that you lend. This will be deducted from the interest and capital repayments that you will receive monthly. Thus, the amounts that you will receive will be net of our fees. There is no additional fee for being a client of the Money&Co. Portfolio Service.

How does the loan auction work?

When a company has been approved and a credit rating attributed, then the auction will go live. Bramdean will decide whether to make a bid on your behalf based on the parameters agreed when you became a Money&Co. Portfolio Service client. Once the loan has been filled, the loan will be added to your portfolio.

What due diligence does Money&Co. undertake on borrowers?

Money&Co. undertakes credit analysis on borrowers. Borrowers must have at least three years of filed accounts before Money&Co. will even consider approving them. Companies that have seen a sharp decline in profits or which are loss-making will not be approved. Profitability must be steady or rising in order to gain credit approval.

How is the Money&Co. credit rating calculated?

Money&Co. has a sophisticated risk-rating process, which is difficult to describe in a few words. However, the key element is that the companies must have three years' of filed accounts and must be profitable in the last financial year. We are looking for companies that have stable or growing profitability.

Are loans guaranteed or secured?

Loans are not guaranteed to be repaid by Money&Co., and so lenders must understand that their capital is potentially at risk. Loans will often be secured on the assets of the company or may carry a personal guarantee from the owner of the business. This will provide some protection if the company defaults on loan repayments.

What are the income tax implications of lending through Money&Co.?

The interest you receive is income, and income tax is payable on that interest unless your loans are held in an Innovative Finance ISA. Please note that we do not deduct tax from the income generated by your loans and so you must declare all income received to HMRC annually. You will be able to see the amount of interest that your portfolio has generated during each tax year on the website. The capital you advance will simply be returned to you at the end of the life of the loan.

If I am a Money&Co. Portfolio Service client, can I also have a Money&Co. Portfolio Innovative Finance ISA?

Yes. Please see the FAQs relating to this product.

What happens if a business I lend to misses a repayment?

Money&Co. will immediately contact the borrower and try to retrieve the payment. If the company is in financial difficulty, Money&Co. may agree different repayment terms. If the company goes into administration, Money&Co. will attempt to get full repayment of any outstanding amounts through calling on security held.

Can a business repay a loan early?

Yes. Borrowers can repay outstanding capital and interest at any time without penalty. Bramdean, acting on your behalf, will then reinvest the proceeds in another loan taking account of the investment parameters agreed at the time that you became a Money&Co. Portfolio Service client.

INHERITANCE TAX SERVICE

What is the Money&Co. Inheritance Tax Service?

The Money&Co. Inheritance Tax Service allows you to invest in loans orginated by Money&Co. via your own lending company and using the services of a professional fund manager. Bramdean Asset Management LLP (Bramdean) will manage your portfolio within the parameters agreed when you become a client. Unlike other lenders, you will not have to make decisions about which loans to buy and participate in the auctions. Bramdean will do this for you. After two years, ownership of your lending vehicle will fall outside your estate for Inheritance Tax purposes.

What is the minimum investment for the Money&Co. Inheritance Tax Service Service?

The minimum investment for the Money&Co. Inheritance Tax Service is £150,000.

How does the Money&Co. Inheritance Tax Service work?

The Money&Co. Inheritance Tax Service allows those with a minimum of £150,000 to benefit from Business Relief through setting up a lending vehicle and making asset-backed loans. After two years, the lending vehicle will be exempt from Inheritance Tax. The loan portfolios are managed by Bramdean and the loans typically receive a fixed rate of return of 7% per annum after all charges.

What is the current Inheritance Tax threshold and rate?

The current threshold for payment of Inheritance Tax is £325,000 for each UK taxpayer. If the family home is passed to the children before death, then the threshold increases to £450,000. In addition, if the estate is below the threshold and the deceased has a spouse or partner, then any unused allowance can be passed to them. Thus, the absolute maximum threshold that could be achieved would be £900,000 (house passed to children and first partner dying has no other assets). The value of the estate above the threshold will be taxed at 40%. The rate decreases to 36% if 10% of the estate is given to charity.

What is Business Relief?

Business Relief gives inheritance tax exemption on the value of shares in unquoted companies that have been held for at least 2 years and which are involved in a qualifying trade. Lending is a qualifying trade.

What are the key features of the Money&Co. Inheritance Tax Service?

The key features are as follows:

Money&Co. establishes the lending vehicle for you;

Money&Co. administers the lending vehicle for you;

The vehicle signs a service agreement with Money&Co. and the annual fee is 1% per annum (i.e. the same as for all other lenders on the site even though there are additional services being provided);

The vehicle signs an agreement with Money&Co. and Bramdean Asset Management and Bramdean manages the loan portfolio for the lending vehicle with only asset-backed loans being held in order to preserve capital. Bramdean is paid by Money&Co. from its fee and so there is no charge for the actual fund management of the loan portfolio;

The vehicle is subject to corporation tax on the income from loans net of costs;

The residual income can be paid out as a dividend or reinvested in loans. Reinvestment is preferable from a tax point of view;

Shares in the lending vehicle can be transferred during your life time and the shares will still not be subject to Inheritance Tax on your death as long as the two-year period has been observed.

Bramdean will ensure that there is never more than 50% in cash within the vehicle, which is a requirement for Business Relief to apply.

What are the advantages for me of using the Service?

You retain control of your capital;

After the payment of corporation tax, income can be reinvested, increasing the pot of assets in an inheritance tax-free environment.

You can pass assets to your children tax-free after 2 years, whilst still retaining control.

What are asset-backed loans?

These are loans where Money&Co. has a charge on behalf of its lenders over an asset, usually a property. Money&Co. might have a first or second charge over the underlying property. In either case, Money&Co. will ensure that there is sufficient headroom to allow for any financial shocks and that it will be able to get money back for its lenders if the borrower is in default.

How does Money&Co. select loans?

Money&Co. has a credit framework, which sets out certain criteria that borrowers must meet in order for a loan to be considered. When a borrower contacts Money&Co., a representative must complete an online credit application. Money&Co. has a system that then determines within 30 minutes if the application meets its borrower requirements. If it does, a credit analyst then picks up the application and contacts the borrower and arranges a meeting. The credit analyst then writes a credit note and recommends a credit rating for the loan. Money&Co. has five credit ratings: A+, A, B+, B and C+. Asset-backed loans will generally have an A+ or A credit rating. The credit rating reflects the likelihood of there being a default. Money&Co.’s Credit Committee, which consists of the Chairman, the CEO and the Head of Credit, will consider the loan application and approve or decline it. Once approved, the loan is placed on the Money&Co. site for lenders to fill.

How do I get exposure to loans?

A fund manager at Bramdean is responsible for the Money&Co. Inheritance Tax Service accounts and will select the loans for you. There is no additional charge for this service and investors will pay the same annual fee of 1% as all other Money&Co. investors.

What happens if I want some or all of my money back?

Loans will typically have a term of 3-5 years. If you want your money back before the end of the term of a loan or loans, Bramdean will put your loans, loan or part of a loan up for sale in the Money&Co. loan market. In the past, all loans that have been put up for sale have been sold within a few days, but it must be emphasised that there is no guarantee that it will be possible to sell your loans, loan or part of a loan.

Will my investment be protected by the Financial Services Compensation Scheme (FSCS)?

Your loans will not be covered by the FSCS as P2P loans are specifically excluded from the part of the scheme that covers deposits made with banks, building societies and credit unions. However, as an FCA-regulated investment firm, Bramdean is covered by the FSCS and so, as a client of Bramdean, you will be protected. The maximum amount of compensation that an investor can get if an investment firm is in default under the FCA/FSCS definition is £50,000.

How do I apply to become a client of the Money&Co. Inheritance Tax Service?

Fill in the form online and we will then contact you and explain the account opening process. This service is only available to high-net-worth and sophisticated investors and the minimum investment is £150,000.

When I become a Money&Co. Inheritance Tax Service client, do I need to read the Lender Terms?

You should read the Lender Terms because they set out the risks inherent in making a loan to a Money&Co. borrower. Even as a Money&Co. Inheritance Tax Service client, where Bramdean will be making lending decisions on your behalf, you need to be fully appraised and aware of these risks before lending.

What are the risks of being a lender?

When you lend to a small or medium-sized business, you inevitably take on risk. While we do extensive credit analysis of businesses seeking funds, it is possible that a business may fail. In that case, you may lose all or part of the money you have loaned to the business. Your capital is at risk, as is the income you would have been entitled to. Money&Co. will seek to recover any bad debts but will not provide any compensation in the event that this is unsuccessful. There are other risks associated with making fixed-rate, fixed-term loans. You may find that your money could earn a better rate of return elsewhere because interest rates have risen significantly but your money is locked in (known as interest-rate risk). If you decide you need to realise the cash lent through Money&Co., you may find that you cannot sell your loan at a price you are happy with (there is no guarantee of finding a buyer). You may have no choice but to hold a loan because the borrower has missed a payment and you are not allowed to sell in the loan market when this happens (known as liquidity risk).

Are my details visible to the borrower if Bramdean makes a bid on my behalf?

Yes. Live bids placed on your behalf by Bramdean are visible to the businesses seeking funding. Money&Co. does not do 'blind' auctions.

As a lender will I have a stake in the company I'm giving money to?

No. Your loan earns you interest and capital repayments over a certain period, subject to the borrower meeting commitments to pay these amounts. You will not own shares in the company.

What kinds of loans are on offer?

Simple, fixed-rate loans: Bramdean will bid on your behalf to provide funds at a certain rate for the duration of the loan term. If your bid is accepted into the final loan sum, that's what you get.

Can I be a Money&Co. Inheritance Tax Service client if I don't live in the UK?

Yes, but the client take-on process is more complicated if you live outside the UK. However, it is only worth being a client if you pay tax in the UK and your estate will be subject to Inheritance Tax after your death.

What does the "loan market" mean?

If you instruct Bramdean to liquidate some or all of your lending vehicle’s loan portfolio, loans will be placed in the loan market. The loan market allows other lenders to purchase your loans. We charge 0.25% commission on all sales to the seller. Please note that there is no guarantee that you will be able to sell your loan.

Can I sell my lending vehicle’s live loans at any time?

Yes, if Bramdean can find a buyer in the loan market and the loans have a perfect repayment history. However, if your loans have had one or more repayments missed, you will not be able to sell them and you will have to hold them for the full term.

What does selling at a premium or discount mean?

Selling at a premium means you're getting more money back on the amount of the loan left to be repaid, than you would if you did not sell the right to be repaid to a new lender. Premium sales will typically occur if interest rates go down, and credit becomes cheap. Selling at a discount is the other side of that coin. You sell the right to receive income from a business to a new lender, and you receive less money than the amount left to be repaid on the loan.

What does Money&Co.'s credit rating mean?

When a company comes onto the site and applies for a loan, our credit analysts attribute a credit rating. The credit scale is alphabetical: A+ is the highest, with C+ the lowest. Thus a company with a rating of A+ will, in our risk-assessment team's judgment, be less risky than a borrowing company with a rating of A or B+. We are taking a conservative approach and will only approve loans to companies that are reasonably strong financially. Within this group of companies, however, some will be stronger than others and the credit rating will provide guidance to lenders in terms of what rate they should ask for on their money and how likely or not it is that a company might default on loan repayments. Companies that are weaker financially will be expected to pay a higher rate of interest. This may sound counterintuitive, but that is how credit markets work. It is very important that you spread the money that you are lending across as many companies as possible in order to minimise any losses that might occur as a result of bad debts.

How do I track the progress of my lending vehicle’s loans?

When you become a Money&Co. Inheritance Tax Service client, we will give you a login so that you can access information about your loan portfolio.

Once my lending vehicle has made a loan, how often will it receive interest?

Typically, fixed-term loans pay interest every six months and capital is returned at the end of the loan. Money&Co. deducts its annual fee of 1% from the interest, so you receive these payments net of our fee.

When does my lending vehicle get its capital back?

Fixed rate loans are repaid at the end of the term of the loan.

What happens if Bramdean enters a bid on behalf of my lending vehicle and the company doesn't raise all the money it wants?

If the company doesn't raise all the money, then nothing will be lent. The company will have the option to come back onto the site and ask for a smaller amount.

What are the costs of lending through Money&Co.?

We will charge you 1% per annum on all the amounts that you lend. This will be deducted from the interest and capital repayments that you will receive monthly. Thus, the amounts that you will receive will be net of our fees. There is no additional fee for being a client of the Money&Co. Inheritance Tax Service.

How does the loan auction work?

When a company has been approved and a credit rating attributed, then the auction will go live. Bramdean will decide whether to make a bid on your behalf based on the parameters agreed when you became a Money&Co. Inheritance Tax Service client. Once the loan has been filled, the loan will be added to your portfolio.

What due diligence does Money&Co. undertake on borrowers?

Money&Co. undertakes credit analysis on borrowers. Borrowers must have at least three years of filed accounts before Money&Co. will even consider approving them. Companies that have seen a sharp decline in profits or which are loss-making will not be approved. Profitability must be steady or rising in order to gain credit approval.

How is the Money&Co. credit rating calculated?

Money&Co. has a sophisticated risk-rating process, which is difficult to describe in a few words. However, the key element is that the companies must have three years' of filed accounts and must be profitable in the last financial year. We are looking for companies that have stable or growing profitability.

Are loans guaranteed or secured?

Loans are not guaranteed to be repaid by Money&Co., and so lenders must understand that their capital is potentially at risk. Loans will often be secured on the assets of the company or may carry a personal guarantee from the owner of the business. This will provide some protection if the company defaults on loan repayments.

What are the tax implications of lending through Money&Co.?

Interest paid to your lending vehicle from your Money&Co. loans will be subject to corporation tax. Any dividends that you pay yourself from your lending vehicle will be subject to income tax.

What happens if a business that my lending vehicle has lent to misses a repayment?

Money&Co. will immediately contact the borrower and try to retrieve the payment. If the company is in financial difficulty, Money&Co. may agree different repayment terms. If the company goes into administration, Money&Co. will attempt to get full repayment of any outstanding amounts through calling on security held.

Can a business repay a loan early?

Yes. Borrowers can repay outstanding capital and interest at any time without penalty. Bramdean, acting on your behalf, will then reinvest the proceeds in another loan taking account of the investment parameters agreed at the time that you became a Money&Co. Inheritance Tax Service client.