P2P Property Lending Platforms Are Increasingly Mainstream For SMEs
Proplend was mentioned in a recent Peer2Peer Finance News feature (24 April), as one of the P2P property platforms making a significant contribution to the alternative finance sector.
The article focuses on the crucial role these “innovative funders” are playing for UK Small and Medium-size Enterprises (SMEs) – finding themselves increasingly dependent on P2P in the wake of traditional lending options.
Peer to peer lending is itself becoming an accepted, mainstream source of business finance, offering various non-bank advantages. SMEs are benefiting from expedited draw-down as a result of Financial Technology, interest only repayment and direct access to open-minded P2P funding decision makers.
While platforms like Proplend give borrowers access to funding which may not otherwise be available, this is not to say our borrowers aren’t creditworthy – the number of banks’ lending to this sector has just fallen from around 60 to just a dozen or so. We are proud to have not had any loan arrears or defaults to date. Proplend takes a number of steps to minimise lending risk including comprehensive due diligence checks on the company, the property and the leases in place to fund interest payments.
The article also highlights the importance of security behind the lending with one P2P platform Chief Executive stating that; “Secured lending is more appealing than unsecured, given the possibility to recover capital in the event of default.”
With a first legal charge against UK commercial property for all our loans, this lender security is one of the foundations of the Proplend platform. But as our own CEO, Brian Bartaby warns in the same article; “It is very important not to fall into a false sense of security just because a loan is backed by property.”
Brian Bartaby; “Not all property-backed loans are equal. Remember property development creates a capital gain and not an income stream, which is important when looking to pay interest to lenders.”
Proplend facilitates loans for refinancing existing commercial mortgages and raise capital against unencumbered UK commercial properties – not for property development. Crucially all our listed loans are secured not just by commercial property at a maximum 75% loan to value, but by income producing property with documented income streams at least 1.25 times the monthly interest payments.
As the peer to peer lending market continues to expand, boosted by the introduction of IFISA (Innovative Finance ISA) and a growing list FCA approved platforms, SME borrowers are once again starting to benefit from provider competition and choice.
P2P advocates Orca concluding that lending platforms; “… employ a rigorous screening and vetting process, but use technology to advance the process and streamline it so borrowers can be approved faster.”
Read the full Peer2Peer Finance News feature here.