Proplend’s six initial VAT loans have been repaid in full
Proplend has reported full repayment for all six of its inaugural VAT loans, having lent a total of more than £4m since the product launched in August 2021.
According to reporting by Matthew Howard at 4th Way, to date the loans have been about a fifth the size of the VAT due to be paid back, while the lender tests the market. This makes them a relatively safe investment option.
The loans are made to property investors who have to pay VAT on purchases. The borrower pays the VAT to HMRC and makes a simultaneous rebate claim.
The VAT loans pay a 9 per cent interest rate but they are short-term loans of just 90 to 120 days.
Read more: Proplend plans new VAT loan product
Proplend appointed VAT lending expert Peter Bloom as a non-executive director when the loans were rolled out in late 2021. However, Bloom stepped down from his role as a director last month.
Speaking to P2P Finance News his morning, Proplend chief executive Brian Bartaby said Bloom’s departure would not affect the continuation of the product.
“They’re driven by demand, so as and when we have requirements for them, they come in,” he said.
Read more: Proplend hails November as record month
4th Way’s article also pointed to Proplend’s instantly accessible tranche A loans, which have an average lender rate of 6.3 per cent.
“The amount the borrower is borrowing is just half the size of the property valuations. That’s a lot of protection against lender losses,” Howard pointed out.
“On top of that, virtually all of these current loans are where the borrowers are earning rent on the properties you’re lending against. That rent more than covers the monthly payments to you.”
Proplend has paid out approximately £20m in interest to lenders since 2014 and has seen just £40,000 in total write-offs on one of its slightly riskier non-tranche-A loans, according to 4th Way.
Read more: Everything you need to know about property-backed IFISAs