BLEND Network is a peer-to-peer loan network that links lenders directly to borrowers who are all UK-based experienced developers. All loans are protected against the borrower's first property payment and personal guarantee. Lenders on BLEND's loan-based crowdfunding platform have the option of lending money to property-secured borrowers at a minimum of £1,000 and thereby buying loan shares of up to 15 percent p.a.
BLEND Network: Benefits and Drawbacks
- High returns allow for up to 15 percent
- Some of UK's highest interest rates for backed P2P loans
- LTV (Loan-to-Value) ratio is rational
- Automatic investment available
- Detailed info, including independent collateral valuation reports
- All alternative investments with lower returns are high risk
- Small quantity of loans available on the platform
- Best for skilled investors
- £1,000 per loan is considered a high minimum investment
Loans on BLEND
BLEND's platform has two main types of loans:
- Loans to small developers
- Projects of conversions
Small developer loans:
These loans target developers with a successful track record in their area. The development usually consists of 6-8 residential properties, all of which would be mid-market given their individual cost and quality. Typically, interest rates for these types of loans range from 10% to 12%.
Conversion projects are another common loan form on the peer-to-peer BLEND marketplace. Conversion projects are, as the name suggests, projects aimed at transforming or modifying a property's intent to cover something else once obtained. For example, converting office buildings into flats or restaurants into medical offices can be considered this. The interest rate for this form of loan is the same as loans to small developers: 10-12%.
Buyback BLEND Guarantee
Investing money often involves some risk factor. To mitigate this risk factor, most P2P platforms offer some kind of Buyback Guarantee, ensuring that the borrower recovers his/her money in case of a default loan.
BLEND gives no loan buyback guarantee.
However, BLEND aims to reduce the risk by ensuring that all lenders have an asset as collateral to be discussed in more detail below under "Assets as collateral."
What if BLEND Closes or Goes Bankrupt?
P2P lending comes with two separate forms of investment structure, namely direct investment structure and indirect investment structure.
With direct investment structure, lenders directly buy claims against borrowers. For indirect investment, on the other hand, loans are provided by platforms to borrowers and exposure is gained by investing in these loans.
The investment framework on BLEND's peer-to-peer platform is direct, meaning lenders lend directly to borrowers.
In case of bankruptcy or insolvency, this means that lenders on BLEND bring claims directly against borrowers, not the network. That said, the Financial Conduct Authority, which has controlled the P2P lending industry since 2014, needs BLEND to ensure that current loan repayments will still be obtained and distributed to borrowers if BLEND leaves business. In BLEND's case, a way to do this was to sign an agreement with a third party called Resolution Compliance Limited. The arrangement specifies that Resolution Compliance Ltd. will take over all unpaid loan contracts if BLEND stops trading.
Assets as Collateral
All loans on BLEND's marketplace are guaranteed against the property's first charge — some loans also come with personal guarantees. In case of default, BLEND will repossess these properties as collateral, and the repossessed property will be liquidated in the open market on behalf of lenders.
BLEND has strongly prioritized developing an easy-to-use interface for both lenders and borrowers, so it is clear to anyone visiting BLEND's website that the interface has been built with usability in mind – the software is intuitive and very user-friendly.
After registering as a user (see "Registration Process on BLEND" below), you can immediately start browsing through available loans on the platform.
To narrow down the list of loans displayed in the summary, you can use the filtering options at the top of the page. You can opt to see different sectors you may consider investing in. You can also opt to just see loans actually on the site by ticking the "Live Loans" box under "Status" section (see screenshot below).
Automatic investment is called AutoLend on BLEND and is a feature that allows borrowers to automatically invest in loans based on a set of requirements that borrowers choose themselves. It ensures that BLEND will automatically invest in the next available loan that meets your specified requirements and only the amount of money you have chosen beforehand.
On the positive note, AutoLend helps you to spread your capital through several loans. The drawback is you have less influence on what individual loans you end up investing in.
Please note that AutoLend will switch off if you have insufficient funds (£2,000) on your account.
If a lender wishes to liquidate a loan, he/she can sell the loan to other users on the site. The lender may either sell all of his/her stakes in a given loan or only divest from a smaller stake.
Reselling and buying loans take place on BLEND's Secondary Market, a platform for existing loans, not new loans.
BLEND users interested in buying secondary market loans can easily browse the marketplace for existing loans by applying a specific set of filters (see screenshot below). For example, interested buyers can only choose to see loans sold at premium or discount, which will be explained below the screenshot.
When selling a loan back to the market, lenders can sell it back in three ways:
- At a premium of 2 percent
- At a par
- At a 1% discount
At a 2 percent premium:
The lender sells a £1,000 loan at a 2% premium and collects £1,000 + £20 from the buyer.
At a par:
The lender sells a £1,000 loan and collects £1,000 from the buyer.
At a 1% discount:
The lender sells a £1,000 loan at a 1% discount and gets from the buyer £1,000 – £10 = £990.
Please notice that reselling a loan on the secondary market entails a fee of 0.06 percent (this amount includes VAT) of the remaining capital sold on the site.
The three examples above have not received the secondary market premium of £6 in such particular cases.
Please also remember that loans offered on the secondary market can only be accessed 24 hours after being advertised to give all borrowers a reasonable chance to review the loan and all related information and additional details before determining whether or not they are interested in buying the loan. Loan information contains items like:
- Interest rate
- Loans volume
- Remaining loan term
Registration Process on BLEND
BLEND's registration process is very quick and similar to that of most other peer-to-peer sites. Simply enter your first name, last name and password. Hereafter you have to select a password containing a minimum of 8 characters, one of which must be a capital letter and at least one other must be a number.
Before clicking the 'Enter' button, you must choose whether to enter as a lender or borrower.
To approve your registration, BLEND will require a KYC (Know Your Customer) and an AML (Anti Money Laundering) check. When these checks are executed and cleared, your account is enabled.
Activating a new account can take one to two regular business days.
Deposit & Withdrawal
After you have registered your account and passed KYC and AML tests (explained in the paragraph above), you can access the "My Dashboard" section. From 'My Dashboard,' go to 'Manage My Account.' You will make deposits and withdrawals here.
To make a deposit, go to the 'Deposit' tab on the left side and enter the sum you want to transfer to your account. Once you do so, you receive BLEND's detailed bank information containing the unique transaction reference.
Upon obtaining your unique transaction reference, you can access your personal bank account and transfer money using BLEND's information.
As a rule, a deposit made in the morning will be available in your account by the end of the day, while deposits made in the evenings will be visible on lenders' accounts around midday afternoon.
To withdraw money from your account, simply click on the "Withdraw" tab and follow BLEND's instructions. The minimum you can withdraw is £0.10.
Reporting on BLEND
Like for other peer-to-peer sites, reporting is available on BLEND in "My Dashboard." Lenders will get an rundown of all their investment activities here. You will see, amongst other things:
- How big your current deposit is ('available to lend')
- How high is your return on borrowed loans ('total interest received to date')
- How many loans you invested in ('live loans')
It is each lender’s own responsibility to declare any money earned through BLEND to HMRC. Lenders can download an individual tax statement at any time from the lender dashboard ('Manage my account' -> 'Tax Document'). Interest payments from loans made through BLEND are paid gross and no tax is withheld by us. If you are unsure of your tax position you should take independent professional advice.
BLEND provides a detailed FAQ with five sections, each covering a different topic:
- General FAQ
- FAQ for lenders
- Secondary Market
- FAQ for borrowers
If you can not find answers to your questions in either of the FAQ pages, you can either contact BLEND's customer service by calling them on +44(0)20 3409 3300 or by completing their contact form as shown in the screenshot below.
Who can borrow on BLEND Network?
Blend offers financial bridging and growth. The loan size is between £150,000 and £3,000,000. Borrowers must be UK-based and have adequate collateral to fund the loan.
Is BLEND Network regulated?
The BLEND Network platform is an approved agent of Resolution Compliance Ltd regulated by the Financial Conduct Authority under registration number 574048. Financial Compensation Scheme (FSCS) does not cover BLEND.
BLEND Network main features and highlights
- Property Lending