Mini-bonds, sometimes sold on crowdfunding websites, are loans to a company that normally run for three to five years with interest rates of six to eight per cent.
They have become popular in recent years — and are often sold with a freebie such as a burrito or bottle of wine — but the FCA warns “mini-bonds are illiquid and can be high-risk”. Like peer-to-peer and crowdfunding, they are not covered by the Financial Services Compensation Scheme.