EDINBURGH alternative finance business LendingCrowd is looking to take advantage of changes introduced by the Government last year to launch an innovative finance ISA within the next few weeks.

The peer-to-peer lender, which uses cash invested by users of its site to lend to small businesses, will begin offering the product as soon as it receives approval from HMRC.

Chief executive and co-founder Stuart Lunn said innovative finance ISAs fit well with the peer-to-peer model because they “sit between cash ISAs and stocks and shares ISAs in terms of risk profile”.

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The LendingCrowd model sees investors either bid to lend to businesses seeking capital via its website or buy out existing loans that are listed on its loan exchange.

LendingCrowd takes responsibility for checking each company’s credit worthiness but encourages investors to spread their cash across a broad range of loans to insulate against any borrowers defaulting.

Mr Lunn said that LendingCrowd had set a minimum investment level for the ISA of £1,000 in a bid to ensure investors have a “sufficient spread across different assets”.

The ISA will accept lump-sum investments from launch but Mr Lunn said it is looking to add the function for regular investments in due course.

“We have the mechanism to be able to invest periodically but we haven’t decided whether we will have that from launch or not,” he said. “We will certainly have the ability to offer that at some stage.”

Investors will be able to withdraw their cash from the ISA without notice at any point.

LendingCrowd, which launched in 2014, has seen over £9m lent via its site since then, with over 2,000 investors currently using the platform. Loans, which can be made up of small sums from hundreds of investors, are typically in the region of £20,000 to £1m.

In October LendingCrowd signed a deal with Scottish Enterprise that saw the latter’s investment arm, Scottish Investment Bank, make £2.75m of funding available to borrowers on the site.

Mr Lunn said that one of the firm’s main priorities for 2017 is to make sure companies know LendingCrowd could be a source of finance for them.

“The attractiveness of the speed of our decision-making resonates with company owners but the issue, particularly in Scotland, is making them aware that we’re here,” he said.