Who can become a Strata Investor?
Any individual aged 18 or above who is a UK resident and has a UK current account can lend. Also any Limited Liability company can lend provided the transaction is authorised by the Directors.What is the minimum and maximum I can lend?
Once you’ve joined as an investor you can lend anything you are willing to commit.
What returns can I expect?
Strata is a marketplace, not a bank, so we cannot guarantee what the level of returns will be. The amount you get depends on the rates you agree with borrowers and will be dictated by the level of security and the demand from other investors to lend on specific transactions. Every transaction is different however you stipulate what returns you are looking for at the outset.
How should I decide on my rates?
The rates you look to earn will ultimately determine how quickly borrowers take up your money.One way of deciding on your rates is to look at what other transactions are being completed at.
We can also give you guidance as to the level of returns each particular borrower is willing to accept.
How do I lend my money out?
Once you have agreed to lend on a particular deal then you would instruct solicitors to act for you to prepare the necessary loan documentation and complete the legal process to ensure the loan is fully secured.
At Strata we have established close working relationships with a number of firms of solicitors who are on all the main Bank panels and this will help each transaction to be completed smoothly with the assistance from experienced professionals. In some cases a solicitor will be able to act on behalf of both the borrower and the Bank. You would need to take independent legal advice.
How safe is my money?
Ultimately there is a risk to lending your money, however this is not being lent to the business as equity rather specifically lent with property being offered as security in return for your investment.
How do I get my money back?
As the end of the period of your loan approaches, we will work with you and the borrower to refinance the property. In most cases we expect this to be achieved by the primary lender extending their facilities to repay your more expensive loan. Alternatively we would look to refinance the property to the wider market to repay both you and the primary lender.
However we acknowledge this does rely upon a number of variables:
1) Lenders have an appetite to lend to the business
2) Property values haven’t deteriorated the position
3) The trading performance of the borrower to continue to service the debt
What happens if the Business goes Bust?
This is a specific query for those committing funds to trading businesses that own their own premises. In the event of insolvency, the administrator’s agents would market the property for sale. Proceeds form the sale will be used to repay the charge holders in order.
It is possible that if the property sells for less than the total debt then you could lose some or your entire loan. In such circumstances, it is not uncommon for the second charge holder to purchase the property from the administrator.
Can I own the property I am lending against?
Yes in certain circumstances, especially when in distress, it may be preferable for you to acquire the property and lease it back to the business. This would mean that you would receive your return through rental income rather than loan interest.
How much does it cost?
The total cost for a single application is £250 (plus VAT)
The first step is a payment of £250 (plus VAT) when you start creating a Summary of your proposal. Once this has been checked we will show this to our database of investors
Once you get funding we ask for a 5% success fee, so you might want to plan ahead and build this into the amount of investment you ask for so you’re not out of pocket.
Why isn’t it free of charge?
Many people have asked us why we charge for this service…well, we’re running a business as well and we need to cover our admin and promotion costs, pay staff to check your submission and keep this in the minds of our investors and pay for the maintenance of the website. More importantly we find thousands of wealthy people, who are often quite secretive, and get your proposal in front of them in as many ways possible, online, in person and in print.
To set up a serious business with outside funding you do need to be prepared to spend some money. In some ways the £250 (plus VAT) fee also acts as a filter for people who are not really committed to doing what it takes to be successful in obtaining thsi second layer of funding.
The 5% success fee that you’ll need to pay can be built into the amount of investment you ask for, and ensures that, like you, we’re completely focussed on your success.
How do Strata Finance’s costs compare with Angel Funders?
Angel groups are usually geared towards larger deals and are usually unsecured, equity structured deals.They assign an advisor to help you write your Business Plan and spend quite a lot of time helping and coaching you. In return most groups charge an upfront fee, either a monthly fee of hundreds of pounds or a one-off fee of several thousand pounds. Then they attend all the meetings up to funding and take a fee or 4-5% at this point and/or an equity stake of around 5% in the business.
Many Angel groups still only find this cost effective for deals over £500k so they won’t be interested if you’re raising a smaller sum. This is why Strata was set up to be a low cost solution for property focused deals.
You can test the water for a few months, risking just £250 plus VAT, You’ll only need to pay our success fee if you’re successful and this can be built into the amount of investment you’re asking for so that you’re not out of pocket.
Who are your Investors?
The Investors are all people with money to invest. They have signed a confidentiality agreement and certified that they are sophisticated investors or high net worth, which means they have over £100k in assets other than in their home. Additionally we have a number of corporate clients who also have cash surpluses available to invest.
Apart from money, the other thing they have in common is that they have taken the trouble to register with us to look for new opportunities in which they can invest.
Who can become a Strata Borrower?
We accept proposals from individuals and businesses, including Partnerships, Limited Companies and LLPs provided they are UK based and the property involved is also based in the UK.
What is the minimum and maximum I can borrow?
Technically there are no restrictions although we feel that any borrowing less than £50,000 is uneconomic due to the costs involved in completing a loan.
