Terms used in this risk statement are as defined in the Members’ Agreement. Proplend enables you to make fixed rate loans to a corporate Borrower to finance the development of the Borrower’s Property. The loans will be made under individual Loan Contracts directly between you and each Borrower. Proplend is not a party to those Loan Contracts, but agrees to administer them on the terms of the Members’ Agreement. Loans Contracts will have different risks and interest rates according to their ranking (or Priority) in terms of Loan-to-Value. The Borrower will pay the equivalent of either six (6) monthly, or two (2) quarterly, Repayments to be held by us in the Proplend Customer Funds Account. If the Borrower misses a Repayment, you authorise us or a Collections Agency to attempt to collect the outstanding amount. In the meantime, we will credit you for the interest owed from the Interest Reserve, in accordance with the Priority. The Borrower must then top up the Interest Reserve. The principal amount lent under each Loan Contract is repayable at the end of the Term.
The Loan Contracts do not contain security provisions, but each Borrower (and, as appropriate, shareholder(s)) and/or others) will separately agree with Proplend Security Limited (PSL) certain Security Documents in relation to the Property to secure and/or guarantee Repayment of the Loans and PSL holds the benefit of such Security Documents in trust for each Lender.
If a Borrower defaults, dies or cannot pay, PSL will commence recovery of the debt due under the Security Documents and any sum recovered will be paid to the Lender, less any enforcement costs that could not also be recovered. This means that you are unlikely to lose the principal amount you lend at Proplend, and your rate of return is also protected.
Before we allow each Borrower to list a Loan Request on the Service, we make certain identity, fraud and credit checks and PSL obtains certain Due Diligence Material, a Valuation, a Certificate of Title, as specified in Clause 3, in relation to which certain checks will be made.
Your projected return is explained in each Loan Request, taking into account fees, expected default rates. Income tax would be payable at your top marginal rate for the year in which the interest is received.
We charge you a Lender Fee equivalent to 10% of the interest you receive in relation to your Loan Contracts.
If you need access to the money you have lent out before your Borrowers are due to pay it back, you may notify us of your request to assign your Loan Contract(s) to another Lender, in which case we will attempt to match your request with another Lender’s Offer. In the event that any assignment takes place, you will pay a specified fee at the time when the outstanding principal is credited to your Proplend Account. Notice of the assignment will be given to the Borrower and incoming Lender accordingly.
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. Proplend customers do not have recourse to the Financial Services Compensation Scheme.