COLLATERAL is offering a cashback incentive on a £1.683m development loan for student accommodation in Bolton, its largest facility to date.
The peer-to-peer pawnbroker told Peer2Peer Finance News that the marketing tool was introduced in response to investor feedback.
“The loan is much bigger than we’ve had before on our platform so we’re trying to attract larger investors,” said a Collateral spokesperson.
“A number of investors had asked us about incentives.”
The loan offers annual interest of 12 per cent and has a loan to value of 69 per cent.
There is a sliding scale for the cashback offer depending on the size of the investment. Up to £5,000 will receive 0.25 per cent cashback, between £5,000 and £9,999.99 will receive 0.5 per cent cashback and investments between £10,000 and £24,999.99 will get one per cent.
Investments ranging between £25,000 and £49,999.99 will receive two per cent, £50,000 to £99,999.99 can expect three per cent and investments of £100,000 or more will get four per cent cashback.
The loan has a more complicated creditor structure than Collateral’s typical offerings as it was previously on the platform of another P2P lender which still needs to be repaid.
The previous loan was to purchase the land but the new loan is an all-in development finance package to bring the project to fruition, the Collateral spokesperson said.
The early-stage loan has been transferred to Collateral’s platform, but the previous P2P lender has first charge on the facility. Once the loan is filled and the previous lender is repaid, Collateral will put a new development finance loan on its platform in tranches.
“Over 90 units in the development have already been sold out of 140, so we think it’s a safe bet,” said the Collateral spokesperson.
“The developer has a good track record of completing projects.”
It is thought that the previous P2P lender was MoneyThing. A spokesperson from MoneyThing said they were not prepared to comment until they had communicated with their investors.
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