There’s a new player in the crowded UK peer-to-peer lending space, claiming to be the first platform to play matchmaker between retail investors and full-term commercial mortgage borrowers.
Fruitful enters into the bustling world of peer-to-peer lending for property-focused transactions. For borrowers, the platform has been purpose-built to cut out the complexities and onerous fees typically associated with taking out a mortgage. Fruitful’s commercial mortgage availability covers commercial mortgages, buy-to-let mortgages and financing for property renovation and development. Users can borrow up to £1m for terms ranging from 5 to 15 years.
On the investor side of the fence, the current, annualised rate on offer stands at 6%. The platform has also issued a promise that rates will always remain at least 5% above the base rate. All loans will have a first charge claim over the mortgaged property in place as security. The platform’s due diligence criteria includes the stipulation that borrowers must meet a minimum LTV of 65%. A personal guarantee is also required, and the platform spreads all invested funds across various deals in the loanbook. There’s even a provision fund in place – the Canopy Fund – which not only guarantees the return of principal if all else fails but will also make good on the promised interest rate.
Fruitful is also promising an attractive level of liquidity. Investors will be able to withdraw funds, at no additional cost, whenever they please. In theory, the mortgage parts that are vacated by withdrawn investor funds will quickly be filled by both new and existing deposits. It will supposedly take just 1 week on average for investors to execute such a withdrawal – seemingly regardless of the amount that they choose to withdraw. We’re somewhat skeptical as to whether Fruitful’s internal secondary market will function quite so fluidly.
The platform is already fully regulated by the FCA, and has been a while in the making. Fruitful has in fact been through a funding round in 2013 on the UK’s largest equity crowdfunder Crowdcube. Luke Lang, CEO of Crowdcube, was therefore in a position to comment:
"There's a real 'powered by the crowd' mentality fuelling businesses at the moment as entrepreneurs seek new ways other than the existing institutions to finance their growth. Technology is the enabler, connecting people with innovative and disruptive start-ups like Crowdcube and Fruitful.
“People are highly sophisticated in using the Internet to find the best financial deals and we wish Fruitful every success in helping borrowers to bypass the banks and grow its business by reducing complexity and providing low-cost alternatives to savers."
There’s one final twist to this plucky new operator. The platform has forged an alliance with sendacow.org – which will ensure that for every £1,000 invested through the platform, Fruitful will purchase one dairy goat for an African family. In other words, the structure takes the shape of a smart match between decent returns, a good level of security and impact investing.