Crowd2Fund has announced the launch of a new property loan product, secured against either commercial or residential property. Crowd2Fund added that the new vehicle qualifies for inclusion within the platform’s IFISA. Crowd2Fund already offers a range of debt based products including standard loans, revenue loans, bonds and venture debt. The first property backed loan on the platform is said to be a £300,000 campaign for Mark Marengo, a Savile Row tailor focused on exporting quality tailoring internationally.
“The launch of our property loan gives investors access to an asset class which has performed steadily over time and is easy to understand. These asset-backed loans are likely to be popular with P2P crowdfunding investors new to the market due to the perception of them being less risky than standard loans, which do not have security taken out on them,” commented Chris Hancock, Crowd2Fund CEO.
The company says the new loan vehicle is targeted at businesses which own property, or directors who are willing to offer their property as security. Loans are between £100,000 and £1 million and they will typically hold a term of three to five years. Crowd2Fund estimates these loans will carry an APR between 6%-8% before fees and bad debts. For investors, the only fees are the Repayment Fee, set at 1% of the value of repayments, which is collected from each repayment.
Crowd2Fund adds that the introduction of secured property loans will allow investors to further diversify their portfolios. Investors can invest as little as £100 into property loans into the relatively lower risk asset. Crowd2Fund states there have been zero defaults on the platform to date.
For a borrower to participate in a property loan, these businesses are required to let Crowd2Fund take a charge over their tangible assets. The value of the secured property must cover 100% of the total loan value. This means that if the business defaults on their loan, the property will be taken and sold to repay investors.
Crowd2Fund said they wanted a property loan that was simple for businesses and investors to understand. The company said they understand that investors may prefer to allocate their funds to a loan which is secured against real property.
As with a regular loan, businesses will repay investors interest and capital on a monthly basis. This amortizes over time meaning investors are repaid the same amount of money each month, but the interest will decrease as the principle repayment increases.
Crowd2Fund also provides a secondary market allowing investors to sell, or buy, any securities transacted on their platform.
Crowd2Fund reports it has achieved a 9.2% APR return and is growing 50% month over month.