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P2P Lending Through A Pension

By Matthew Howard on 24th December, 2014 | Read more by this author

I totally missed the potential of this when the news broke a few weeks ago.

Proplend, the property P2P lending company, announced that we can now lend through it in a pension wrapper.

At first I thought you, me and most people were automatically excluded, much like with Thin Cats.

That's because this option is just available for investors classed as high-net worth or “sophisticated”. So I wrote it off for most of our audience.

Yet I just noticed the membership criteria  for SIPPClub, Proplend's partner. One of the definitions of high-net worth or “sophisticated” enables many more people to get passed one of the tests to qualify. This applies to me and many of you. See if you can spot it:

  • Annual income of £100,000 or more.
  • £200,000 or more in personal and company pensions.
  • Net assets of £250,000 or more, excluding your home and pension.
  • Member of a network of business angels.
  • Made at least two investments in unlisted companies in the last two years.
  • Work in private equity or finance provision for SMEs.
  • Director of a company with a £1m+ turnover

The answer is: “Made at least two investments in unlisted companies in the last two years.”

Crowdfund your way into a P2P pension

Many ordinary people have done exactly that: when they spared £200 to help crowdfund a couple of start-up businesses. As far as I know, crowdfunding has not been excluded from these regulatory requirements.

I just checked crowdfunding website Crowdcube's small print, which supports my view:

“…for people who have invested in more than one unlisted company (including via Crowdcube) in the last two years…”

I'd ask SIPPClub to confirm that it would allow you to join in these circumstances, but I fear that a reporter like me calling up and asking questions will only make it respond more cautiously than it would if you simply fill in its online form yourselves.

If any of you try, please let other readers know in the comments below.

It's still not for everyone

We haven't risk-rated Proplend yet or gone under the bonnet enough to write one of our Insight Reports, so I don't have a feel for this P2P opportunity yet.

There is also a downside in that, with Proplend, you need a minimum £5,000 to lend to one borrower. Assuming you want to sensibly spread your risks across lots of loans, that puts it right back in the high-net worth ball court again.

The other potential downside is that, since access is so restricted and we're all channelled through to a SIPP from the same place, we might well find the costs of SIPPClub and the SIPP are way too high.

Otherwise it's smooth going :/

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