Crowd for Angels announced on Wednesday it launched its first “crowd bonds,” which are described as specially created secured, high-interest products that are eligible for its new Innovative Finance ISA (IFISA). Introduced by the government in April last year, the IFISA allows investors to earn tax-free income on crowdfunded debt securities.
According to Crowd For Angels, each of the bonds has been designed to offer a higher rate of return than a typical Cash ISA and, providing a further degree of protection, are secured against assets of the borrowing companies or other assets. The IFISA is free and easy to open, available online 24 hours a day, and all investors need to do is register with Crowd for Angels and provide their National Insurance number. The first two companies to issue crowd bonds to investors on the Crowd for Angels platform are the following:
- Seven Spirit Limited: an independent bar & restaurant group raising up to £400,000 and offering 6.4% p.a. interest paid monthly.
- PayitMonthly: a company which helps SMEs offer their customers interest-free finance, which is raising up to £200,000 at a rate of 9% p.a., paid monthly.
“With interest rates on Cash ISAs currently at all-time lows, we expect to see high demand for our crowd bonds. Investors who are willing to take on extra risk by lending to companies have the opportunity of making tax free returns of up to 9% per annum on our asset backed bonds, which compares to an average interest rate of just 0.64% on a Cash ISA.”
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