Investor ‘Lender’ FAQs
Who can become a Proplend Lender?
Residents of the United Kingdom of Great Britain and Northern Ireland are eligible to apply to use the Service as a Lender. For other countries of residence, excluding the Channel Islands and the Isle of Man (“UK”), you are solely responsible for ensuring that your use of the Service does not breach any laws, regulations or rules in your country (including those relating to tax payable on any gross interest received).
You must be at least 18 years old with a current account at a duly authorised financial institution that’s acceptable to Proplend.
*Residents of other countries are accepted on a case by case basis. Please contact us at [email protected]
Can Lenders invest in more than one Tranche?
Yes, a Lender can decide which Tranche to invest in and can invest in one Tranche or a combination of Tranches. They also determine how much to invest in each Tranche (minimum investment is £1,000*).
Can Lenders invest using their SIPP or SSAS?
Yes, Lenders can invest using one of our SIPP or SSAS preferred partners. Please visit our PENSIONS page for more information.
How do Lenders contract with Proplend?
Lenders are bound by the Proplend Members’ Agreement and are required to formally agree to the terms before they can access Loan Investments and invest via Proplend. Lenders should read this document carefully and where necessary, take independent professional advice.
How do Borrowers contract with Lenders?
Borrowers and Lenders will be required to sign direct Loan Contracts.
Borrowers and Lenders should read this document carefully and where necessary, take independent professional advice.
How do Lenders interact with Proplend Security Limited?
Proplend Security Limited will hold the security documents in trust on behalf of the group of Lenders. Lenders should read these documents carefully and where necessary, take independent professional advice.
What is the Loan Structure?
Each whole loan is made up of group of individual Lenders. Each Lender has a direct relationship with the Borrower. Proplend Security Limited holds the security on the property and any other security deemed necessary in trust on behalf of the group of Lenders.
How do I open a Lender Account?
Register with Proplend via the Lender Registration page. Lenders are bound by the Proplend Members’ Agreement and should read this document carefully and where necessary, take independent professional advice. Then complete the Application via the Lender Dashboard and we will carry out the required Know Your Customer (KYC) and Anti-money laundering checks. Once fully approved, your account will be activated.
We will open a Client Account in your name within our Proplend Client Account held with Barclays, you may then fund your Client account by making a bank transfer. A minimum of £1,000 is required. Once you have funded your account, you will be permitted to buy a loan on the Proplend Loan Exchange or make an offer to lend to a loan In Funding. You cannot buy or make an offer to lend for an amount greater than you have freely available in your Client Account.
Can I withdraw my offer to lend or buy once made?
Once committed an offer to buy or lend stands and cannot be withdrawn. If investing into a loan In Funding, then the funds are locked-in for the loan offer amount until the funding process ends. The Lender’s funds are transferred to the Borrower’s Account for drawdown of the loan on the day of closing. If the funding process is unsuccessful the Lender’s funds are released and can be used for other Loan Investments. Additionally, once funded you can sell your Loan using the Proplend Loan Exchange (PLE).
Can I access my money at any time?
Once you have made an investment using the Proplend platform, your money will be locked in for the term of the loan; however, you can sell your loan to another Proplend Registered Member using the Proplend Loan Exchange. Any un-lent monies which are not committed to an active offer to lend can be withdrawn by requesting the funds from your account.
Will I be able to claim against the authorities if something goes wrong?
If you have a complaint about the Service, you should email [email protected] with brief details of your complaint and your account number. Your complaint will then be handled in accordance with Clause 14 of the Proplend Members’ Agreement. Complaints by individuals may ultimately be referred to the Financial Ombudsman Service, and you may also have the right to make such a complaint directly. Your money is held by us in trust on your behalf in a segregated bank account so that it does not form part of our assets and would not be available to our creditors in the event of our insolvency; and your Loan Contracts and the Security Documents would remain enforceable even if we ceased to trade for any reason.
Should I seek professional advice before I lend?
If you are in any doubt as to whether lending using the Proplend platform is suitable for you, you should seek independent advice from a financial adviser or other professional.
What are the risks?
There is no guarantee that investors will be repaid the amount of their original loan, nor any interest on that loan. The past performance, including the rates of default, of loans made to Borrowers via Proplend should not be viewed as a guide to future performance. For further information please read our Lending Risks page.
Is my money protected?
Lenders’ unlent money is held in a Proplend Client Account held with Barclays Bank, which is protected under the Financial Services Compensation Scheme (FSCS). Funds lent into a Proplend Loan are no longer protected under the FSCS.
Can I choose which loans I wish to invest in?
Are the loans you offer ones the banks won’t consider?
There used to be 60 or 70 banks actively servicing the sub £5m commercial loan sector, today there are only about 10 and there is c£50 billion of outstanding debt which needs to be refinanced. Banks are unable to consider a loan for many reasons, even if it is a fundamentally a good loan.
Unlike banks, Proplend has no restrictions when it comes to lending to any one geographical region, property sector or tenant type.
Is there a minimum/maximum investment amount?
In order to buy a loan on the Proplend Loan Exchange you will need to deposit sufficient funds to cover both the purchase price plus the accrued interest to that date of the loan part you wish to buy. Be advised the accrued interest changes on a daily basis.
In order to lend in the In Funding market, you will be required to deposit a minimum of £1,000 in your Proplend Client Account, Loan Investments are made in multiples of £1,000. There is no maximum and Lenders can invest in whole or part loans.
Is the interest rate that I receive fixed?
Yes, you receive a fixed rate of interest throughout the loan term. The interest rate does not change.
How and when is my interest paid?
Interest is paid gross to Lenders from the Proplend Customer Funds Account on a monthly or quarterly basis, based on the Loan Contract. Each Lender is responsible for accounting for and paying any taxes due on such interest.
Am I liable for tax on the interest I receive?
Yes, in the UK you would be liable for income tax on the interest that you receive as an Investor.
Interest will be paid gross to Lenders, and each Lender shall be responsible for accounting and paying any taxes due on such interest. If you are unsure of your tax position you should take independent professional advice.
Can a Borrower repay the loan early?
Yes, but if they repay the loan early, they may be subject to an Early Repayment Charge, as detailed in the Loan Contract.
What happens if the borrower doesn’t pay?
We will notify Lenders if there is a Borrower interest payment shortfall and the reason for it. Proplend will look to work with the Borrower to resolve any payment issues before a default occurs. If it’s a more serious problem however we will, based on advice, proceed with the most appropriate course of action which may include the appointment of an LPA receiver and/or the sale of the property. Lenders will be able to make a claim against the 6-month Interest Reserve as interest payments fall due for up to a maximum of 6 months.
Please note that a loan that has gone into arrears, which means the interest payment is overdue by more than 7 business days, will not be eligible to be listed on the Proplend Loan Exchange and any loans listed on the Proplend Loan Exchange will be removed.
What fees do I have to pay?
Proplend charges a servicing fee equal to 10% of the interest that Lenders actually receive, and the fees are paid monthly or quarterly, according to when interest is paid. To learn more about Proplend’s fee structure visit our FEES page.
What responsibility does Proplend take for information posted about a particular Loan Request?
Borrowers are required to warrant that all the information they have provided to Proplend is accurate, complete and not misleading. They are asked to formally approve the Loan Request and supporting information that is to be posted related to a particular loan.
Proplend does not take responsibility for the Loan Request and lenders must rely on the accuracy and completeness of information that the Borrower provides, as well as professional reports (including Valuations and Reports on Title) addressed to Proplend Security Limited.
What happens if Proplend dissolves?
- Lenders, money that is not invested is held in a segregated client money account with Barclays Bank plc, which is administered according to the client money rules of the Financial Conduct Authority (“Proplend Customer Funds Account”);
- The Security Document(s) agreed between each Borrower and PSL are held in trust by PSL for and on behalf of the Lenders to the Borrower;
- Proplend has made arrangements with a third party whereby it will take over the administration of the outstanding Loan Contracts in the event that Proplend is insolvent or ceases trading, to ensure that the Borrowers continue to make interest and capital payments as they fall due and the appropriate amounts are then distributed to the Lenders.
Please refer to our Lending Risks page for further information.
Does Proplend Guarantee the loans?
Proplend, does not guarantee the loans. We bring together and present all the information so that Lenders can decide which loans they wish to invest in, using their own judgement.
The list of questions and answers above is provided as a guide to how Proplend operates. None of this content should be construed as legally binding on any party. Borrowers and Lenders should refer to the Proplend Members’ Agreement. Formal Loan Contract documentation and security documentation will always take precedence over this FAQ or any other notice.