Understanding the RisksYour capital is at risk. Peer-to-peer lending is not covered by the Financial Services Compensation Scheme. There is a risk that a borrower may default or be unable to repay some or all of a loan when due. We cannot guarantee that you will be able to realise your investment. We do not offer investment or tax advice.
Please read the following where some of the risks are detailed.
Loss of capital
You may lose all or some of the money you invest. Peer-to-peer lending is not a savings product and you should not invest more than you can afford to lose.
1. Credit risk
A borrower may not repay a loan on time, or at all.
2. No FSCS
Lending through Propifi is not covered by the Financial Services Compensation Scheme.
3. Idle money
Even if you have placed money into your Propifi account, it will not earn interest unless it is lent to a borrower. You are responsible for making loan offers to borrowers. There may not be enough fundraising opportunities for you to invest in. Loans are allocated on a first-come, first-served basis and you may be unable to invest in the opportunities that are available.
Any lending you carry out is highly illiquid. There is currently no secondary market to allow you to realise the value of the loans you participate in. Loans are not transferable. You will not be able to access money you have lent until a loan is repaid at the end of the full term.
5. Market conditions
Money lent through Propifi is concentrated in loans secured against residential or commercial property. The value of the underlying security and the ability of a borrower to repay or refinance a loan will be affected by movements in the property market.
6. Development risk
The borrower’s ability to repay the loan may be dependant upon the timely completion of a development project which they are financing. A development may be affected by unexpected costs or delays.
7. Finance risk
The borrower’s ability to repay may be dependant upon refinancing by a third party. There is no guarantee that they will be able to do so.
8. Time risk
Because of market conditions, development risk or finance risk, the borrower may not be able to repay the loan when anticipated. If the borrower defaults in repayment, it may take a considerable amount of time before any money is recovered from the enforcement of any security.
9. Security may prove inadequate
The value recovered from any asset given in security may be less than anticipated and may be inadequate to cover the capital and interest due to you. The costs of enforcing or recovering the security may not be recovered from the borrower and may reduce the returns to lenders.
Peer-to-peer lending should be carried out only as part of a diversified strategy. You should carefully consider how much you should invest in this asset class. When using Propifi you should spread your lending across multiple businesses to reduce the risk of exposure to a single investment.
You are responsible for your tax affairs. Your tax treatment depends on your individual circumstances and may be subject to change.
12. Past and future performance
Past performance is not a reliable indicator of future results. Forward looking statements, be either Propifi or a borrower, are not guarantees of future performance. Forecasts can be affected by many different factors and may not be a reliable indicator of performance.