Online investment platform Abundance is offering a 2 per cent return to all customers who open an Innovative Finance Isa before 31 May, before any of their money is invested.
The bonus will be paid out on any cash balance which is held in an Abundance Innovative Finance Isa account, but expires once the money is invested through the site.
The platform specialises in ethical peer-to-peer investments and allows investors to choose between a number of loans projects, with interest rates ranging from 6 per cent to 9 per cent, depending on the risk profile.
There are currently no open projects on the website, so investor deposits are being held in a cash account instead.
The firm plans to have a number of new renewable energy projects online before the end of May, and the 2 per cent bonus offer is being offered as an incentive to attract more Isa investors in the interim.
“The 2 per cent bonus is something we did last year successfully when we were waiting for the launch of our Isa,” said Bruce Davis, co-founder and director of Abundance.
“It went so well that we sold out of loans. We then had to go back and get more projects in. We have a number coming through but they’re not available on the site to invest now.
"So we’re saying that people can reserve their allowance while they wait for the loans to appear, and we will pay them a cash incentive of two per cent on their balance until the 31 May, or until they invest that money into a loan.”
The Innovative Finance Isa allows retail consumers to invest their entire Isa allowance of £15,240 in peer-to-peer loans within a tax-free structure.
It was officially introduced in April 2016, with 30 lenders now authorised to offer the product to customers.
However, at the time of writing (24 February), just seven providers have live Innovative Finance Isa offerings on their sites.
As well as Abundance, online lenders Crowdstacker and Crowd2Fund are advertising their own range of Innovative Finance Isa, with targeted returns between 6 per cent and 9 per cent.
Edinburgh-based Lending Crowd is targeting 6 per cent with its SME-focused Innovative Finance Isa, and London’s Lending Works is offering 4 per cent on three-year loans.
Property platforms LandlordInvest and Landbay are also offering Innovative Finance Isa.
Abundance bosses claimed their Isa has attracted more than 1,400 investors since inception, raising about £8m for green projects across the UK.
Since the company began, its investors have raised £37,995,021 to fund 24 projects, with investors receiving £6,392,604 in interest payments.
“The Innovative Finance Isa is appealing to a new, more mainstream audience of investors, so we’re seeing a demographic of investors which is more like the average Isa investor,” said Mr Davis. “Those investors are now looking for peer-to-peer investment products like bonds and loans on an equal basis as stocks and shares Isas.”
However, advisers have expressed caution over Innovative Finance Isa, and most IFAs are unwilling to recommend them to their clients until they know more about them.
