A technology platform matching borrower demand for commercial mortgages with investor demand for income.
- London, United Kingdom
Categories: Finance & Payments Mixed Digital/Non-Digital Mixed B2B/B2C
- Social Media
- Company number
- Incorporation date
- 3 Dec 2012
- Investment sought:
- Equity offered:
Proplend is a financial technology platform helping individual & institutional investors lend money directly to commercial property investors, disrupting the traditional commercial mortgage industry, without the requirement or burden of principal capital.
For commercial property investors, we provide a flexible & user driven alternative to incumbent lenders.
For income investors, we provide the opportunity to earn attractive rates of risk adjusted returns by investing into loans secured by income producing commercial property.
Peer to Peer lending is still considered a new asset class, but Commercial Property Loan syndication is a long-established asset class created by institutional investors, to provide secure & stable income supported by high levels of capital protection.
Proplend has merged these asset classes by splitting sub £5m commercial mortgages into bite sized £1,000 units, then using technology to match borrower demand for loans, with investors demand for income.
Proplend was founded to provide a solution to two different groups of investors, commercial property investors and investors seeking income.
In today’s long term, low interest rate environment, both individual and institutional investors are searching for alternative sources of attractive rates of risk adjusted returns.
There is c£40 billion of sub £5m commercial property debt outstanding in the UK which needs to be refinanced over the next 5 years and whilst there were 50+ Banks, Building Societies and Financial Institutions who serviced this sector back in 2007/2008, this has now dwindled to around 15 today.
Therefore, credit worthy commercial property investors are finding it increasing difficult to source suitable commercial bridge loans and commercial mortgages.
Proplend’s function as a financial technology platform, is to ensure that an interest payment from a borrower to a lender, is made as efficiently and repeatedly as possible.
Substantial accomplishments to date
• Authorised and Regulated by the Financial Conduct Authority, Feb 2017.
• Approved by HMRC as an ISA Manager and ISA launched, May 2017.
• Patron of National Association of Commercial Finance Brokers, Dec 2017.
• Facilitated over £45m of loans for borrowers.
• Returned £14.3m of capital and £4m of interest to investors.
• To date, no loan defaults or lender losses.
• Operate a Secondary Market, the Proplend Loan Exchange.
• AutoLend – launched in Aug 2018 auto diversify our lowest risk tranche, Tranche A (0-50% LTV).
• Proplend Wealth, a dedicated Wealth Manager and IFA portal, over £7m deployed.
• Proplend Pro, a whole loan program for institutional investors, £9.8m deployed.
• Partner with SIPP and SSAS administrators, facilitating lending via pensions.
• Built a skilled team of 11 in property, operations, finance and tech divisions.
Ratings and Awards:
• Proplend has for the past 3 years been awarded the highest rating from 4thway.co.uk, a third-party rating agency of P2P platforms.
• Our tranche A product is currently rated as the second safest P2P investment available by 4thway, up from 3rd position for the past two years – “astoundingly attractive for the risk involved”.
• CEO, Brian Bartaby, noted in the P2P Power 50 2017 as “rising star and definitely one to watch”.
• 2018 Voted the 6th best IFISA manager and the top 3 Property IFISA Managers by 4th Way.
• 2018 Ranked the 7th most promising Fintech start up globally out of 400,000 startups by PreSeries.
Proplend charges borrowers an arrangement fee at the time of the funds being drawn down of typically 2% of the loan amount.
Proplend aims to be totally transparent to investors, passing on the whole interest rate being paid by the borrower to the lenders, and only then charges the lender a fee of 10% of that interest.
We are therefore not only building an ongoing annuity income, we are highly incentivised to only allow loans on the platform, where we believe that the borrower will continue to make monthly interest payments as they fall due.
On the secondary market, Proplend charges the selling lender a fee of 0.5% of the face value of the loan upon a successful sale. We only allow loans to be placed on the loan exchange when they are in good standing and they are all sold at face value plus any accrued interest.
Use of proceeds
The proceeds of this funding round will be used for general working capital purposes as we continue to grow the business and will be invested across three areas:
• Grow our loan origination channels through additions to the borrower facing team and direct marketing campaigns.
• Adding a COO to management level.
• Continued development of our Technology to add new functionality to enhance business efficiency.
These capital projects are expected by the Directors to help the company continue our substantial growth and increase lending capacity.
Our target market are commercial property investors who are either purchasing or refinancing commercial properties held within a corporate structure.
Borrowers are corporate vehicles which already own or are purchasing commercial investment property located in England and Wales.
We offer loans from £250,000 to £5m secured by way of a 1st legal charge against a commercial property which may include, office, retail, industrial, leisure, mixed use, healthcare and HMO’s.
Proplend offers two products:
1. a medium term, up to 5 years, commercial mortgage for an income producing commercial property.
2. short term commercial bridge up to 18 months usually for a non-income producing commercial property.
Our target investors are both individual and institutional looking for attractive rates of risk adjusted returns.
Individual investors who are seeking:
1. attractive rates of risk adjusted fixed income with high levels of capital protection.
2. transparent investment choice either manual or via AutoLend.
3. the ability, where available, to invest in a tax efficient manner using a pension or ISA wrapper.
Investors can invest in the Classic Account with upfront funds.
Our Flexible Innovative Finance ISA (IFISA) allows investors to either subscribe using the current years allocation or transfer in existing ISA’s whether they are Cash or Stocks & Shares.
The launch of the IFISA has opened up access to a potential £270 billion (Dec 2017) pool of cash, which is currently not earning investors sufficient to cover inflation.
The uptake of the IFISA needs to be a slow burn, as a 5% monetary move from cash ISA to IFIFA would overnight nearly double the total P2P investment volume of the past 10 years.
Proplend also works with several Pension Administrators (both SIPP and SSAS), allowing investors to make loans via their pensions.
Wealth Managers and IFA’s can access the platform via Proplend Wealth to facilitate both advised and discretionary investments on behalf of their clients.
Proplend also operates ProplendPro, a whole loan program for Institutional Investors who have capital to deploy and are looking for partners to originate, execute and service loans.
Proplend has two distinct but inextricably linked set of clients, borrowers and lenders. Our challenge is to successfully convey our marketing message to both parties whilst ensuring a consistent brand message.
Proplend connects directly with commercial property investors, we are a team with a vast history of property finance experience and have a strong existing relationship network.
Proplend is a Patron of the National Association of Commercial Finance Brokers (NACFB) which gives access to approximately 1,600 commercial finance brokers. Brokers play an increasingly important role in this intermediated market. We engage with brokers through regular communication and finance related events.
To support these introducers, we are looking to develop a team of regionally located Business Development Managers.
Proplend also has relationships with legal and accountancy firms.
We attract investors directly through online advertising. We are listed on financial aggregator sites such as money.co.uk and Off3r.com and have partnerships with P2P specific websites such as 4thway and Orca.
We have been mentioned in the national press including Financial Times, The Times, The Daily Telegraph and more.
This raise will allow us to roll out a more concentrated investor campaign and promote the Proplend brand via PR.
Proplend has a very loyal existing lender base and regularly run ‘refer a friend promotions’.
We market Proplend Wealth directly to potential Wealth Managers and IFA’s. These have a longer lead time than dealing with investors directly.
From his experience in working in Property Finance, Brian, our CEO, has a strong network to promote Proplend.
Proplend operates in the long-established asset class of commercial property loan syndication. We have refined the traditional securitisation model so lenders are still able to invest across different Loan to Value based risk strips but rather than investing into a pre-packaged pool of mortgages, they can now do so on a loan by loan basis.
Our average sized loan is £1m, this gives us the ability to undertake deeper due diligence on every deal, including meeting every borrower and visiting every property.
Our average client account is £38,000 and as our lender base grows, it will allow us to finance larger creditworthy loans, which in turn facilitates scale.
We are not chasing riskier property loans just to pay our lenders the highest returns.
The majority of properties against which the loans are secured have existing income streams from third party tenants, this sustainable rental income is used to pay the lenders regular interest.
Commercial property loans secured by a 1st legal charge, which is legally documented and registered at the Land Registry and Companies House, can provide greater security and by monitoring where we are in the property cycle, these loans should be able to weather any sector downturns.
Proplend is totally transparent with lenders in that not only do we provide full information on the borrower, the property and the tenants but lenders receive the full interest rate paid by the borrower and only when it has been paid does Proplend charge a fee. We are building a sustainable annuity style revenue model and are highly incentivised to ensure that borrowers continue to make interest payments as they fall due.
We believe that our property lending does not compete directly with most other P2P platforms but on a par with challenger banks, the likes of Shawbrook and Aldermore.
And finally, we are a team of property and credit professionals who are focussed on refinancing the incumbent borrowing & lending model, creating a superior borrower experience and opening an existing institutional only asset class to individual investors.