Proplend has struck an enviable balance between attractive rates of return and a comprehensive security package since the platform launched in 2014. Now, 4 years on with no investor losses and a reputation as one of the safest UK platforms – Refer a Friend 2018 offers another great reason to get onboard the P2P lending train and secure yourself a risk-adjusted return ticket.
Here we summarise 10 great reasons to invest and recommend the platform …
1. Attractive rates of risk-adjusted returns
In the persisting low interest rate, increasing inflation rate environment, cash savers are facing the near impossible task of achieving ‘real’ returns – tax free or not. People are increasingly turning to alternative investments like peer to peer (P2P) lending and innovative ISAs for risk-adjusted, fixed income returns to beat inflation.
Attitudes to investment risk vary greatly but no-one should be happy to be effectively losing money with the value of their money eroded by general price increases. Rates of return are important, but the level of capital security should also be a consideration for all investors, particularly those who prefer to be more cautious.
2. One of the safest UK P2P lending platforms
With inflation-beating income backed by UK property and an interest reserve withheld for each loan – Proplend is currently ranked 2nd in P2P specialist agency 4thWay’s comparison tables. Its lowest risk Tranche A investments are described as “astoundingly attractive for the risks involved” with no loan defaults or investor losses to date.
The platform uses loan-to-value based limits to help quantify and match investments to Lenders risk-reward appetites (more about this later). With a maximum of 50% LTV for Tranche A, an all-time average LTV of less than 60% and a maximum LTV of 75%, all Lenders benefit from a value buffer should the borrower not be able to repay, and the securing property needs to be sold.
3. Commercial Property Backed Lending
Every loan listed on the platform is secured with a first legal charge over commercial property in England or Wales. Approved loan requests are never more than 75% of the current property value and the majority of properties are income producing – supporting the monthly interest serviceability.
Investing in commercial property debt rather than directly in the property equity means Proplend Lenders take less risk and are front of the queue to be repaid if the property is sold or refinanced. While investment property offers attractive returns, in a flat to moderate growth market, debt is the safest property investment.
4. Choice of ways to invest
Originally launching with a ‘Classic’ invest option, there are now a number of ways to invest in our P2P property loans. Total loan capital is typically split into £1,000 parts with tax-free investment now available via SSAS and SIPP pensions and Innovative Finance ISAs.
Those who are looking to invest via a financial adviser can also be accommodated via our Proplend Wealth portal and we’ve also recently introduced a new hassle-free automated investing facility for Classic and ISA accounts. Lenders can invest in one or more ways to one or more Tranches in one or more loans – the choice is yours.
5. Tax free returns via our ‘flexible’ ISA
Following HMRC’s change to permissible ISA investments in 2016, peer to peer lending returns can now be earned tax-free via Innovative Finance ISAs (IFISA). Proplend received its approval in the first half of 2017 and now offers a flexible ISA to new and existing Lenders with no additional charges.
Unlike traditional ISAs where money had to remain in the ISA at all times to preserve its tax-privileged status, money in a flexible ISA can be withdrawn and replaced as your circumstances dictate – provided any replacements are back by the end of the same tax year. Our flexible ISA can be funded with transfers from existing ISAs (including from the other Cash and Stocks and Shares ISA types), as well as with subscriptions from your annual ISA allowance – £20,000 for 2018-19.
6. Manual select or Auto-Lend
Proplend Lenders have traditionally used the comprehensive due diligence we complete on each loan and borrower to manually select their own loan investments – deciding which loans and Tranches to invest in and manually investing their account cash into available loans.
Whilst this continues to be the default investment option, we’ve recently added a low involvement automatic investment facility. Auto-Lend looks to get available cash invested and earning as quickly and hassle-free as possible. Allocating only to our safest Tranche A investments, Auto-Lend is a relatively low risk option that targets a return of 5% after fees – roughly twice the current rate of inflation.
7. LTV-based risk-adjusted investments
We offer a range of loan to value-based investments for a range of risk return appetites using our loan tranching system. Tranche A investments are available in every loan with LTV capped at 50%. Where the overall LTV is more than 50% we can also offer Tranche B (51-65%) and Tranche C (66-75%) with a higher return for their higher risk.
Tranche A investments are first in line to be repaid, with the securing property value having to fall by over 50% before there’s any risk to Lenders capital (in the event that a borrower defaults on repayment). Those willing to accept a higher LTV in return for higher interest rates can invest to Tranches B and C and can also blend their risk and reward by investing to multiple tranches in the same loan.
8. Transparency and aligning our interests with Lenders
We receive many more borrowing enquiries than we list on our platform, with a majority not meeting our creditworthiness and security provision requirements. We share our due diligence with Lenders for all loans we do list but we don’t allow loans to go ‘In Funding’ if our underwriters aren’t entirely confident of repayment and that our Lenders will fully-fund the requirement.
Proplend passes on the full borrower rate of interest each month, crediting participating accounts before deducting our Lender fee for complete fee transparency. Many other platforms choose to charge borrowers one rate and pay Lenders a lower rate. With these platforms you’re still effectively having a fee deducted from your interest (before it gets to you) – you just don’t always know what that fee is.
9. Secondary loan market
The Proplend Loan Exchange (PLE) offers Lenders the opportunity to sell their loan holdings before the end of the term – thereby also giving other Lenders the opportunity to pick up loan parts in active loans. This means new Lenders can potentially diversify their holdings quicker with access to existing loans as well as new ones.
Whilst loans sales on our secondary market aren’t guaranteed, Lenders don’t normally have to wait long to find a buyer. And they can make your loan parts available at any time without worrying about foregoing interest that has accrued but is not yet due. Buying Lenders must pay the accrued interest when purchasing the loan part at face value.
10. Refer a Friend 2018
We want to thank existing Lenders for investing with us by offering a £65 bonus for each friend or family member they recommend. And we want to welcome new Lenders with a £35 bonus for being referred – they themselves are eligible to Refer a Friend as soon as they’ve made a qualifying investment.
Our most recent reason to be a Proplend Lender, runs until 16 November 2018, with referred investors having until 30 November to invest. And with Refer a friend completing our list of 10 great reasons to invest, there’s surely never been a better time to be a Proplend Lender.
