We’re in the relationship business.

Relationships, just like property, need to be constantly maintained and improved. This is the only way to build trust, which we’ve been doing for over 20 years. Professional and approachable, we speak openly and honestly and welcome the same from our customers. As a business, our value lies in working with our clients to solve their problems, in order to build the trust we strive for every day. We do this through our two core products:

Propell - Debtor Finance
Propell - Building Trust
Propell Project Loans
Propell - Debtor Funding Solutions

Debtor Finance made simple.

If payments have dried up, your revenue stream shouldn’t.

Propell - Debtor Finance

The Problem

When property home owners don’t pay their levies, it places undue pressure on the community scheme.

With cash tied up in arrear levies, it is unfair to rely on paying owners’ contributions to cover all expenses and it often leads to further default.

The legal cost for the collection of arrears, which is seldom adequately budgeted for, creates a further burden.

Without the budgeted levy income, there are three possible scenarios:

  1. Paying owners have to cough up more
  2. Dip into reserve funds to cover the shortfall or;
  3. Cut back on planned projects or other expenses

Levy default could lead to a vicious cycle in which buildings are not adequately maintained and bills are left unpaid, leading to a deterioration in property value.

The Solution

Propell’s Debtor Finance provides community schemes with a reliable and steady cash flow.

Debtor Finance is a revolving loan of up to 80% of levy arrears.

By unlocking the cash tied up in arrears, there is no interruption to paying bills or performing maintenance.

The revolving line of credit allows community schemes to meet their budgets without requiring owners to cough up more or dipping into reserves meant for a rainy day.

Debtor Finance is a loan facility to cover the shortfall left by owners who default on their levy obligation.
Propell makes an initial advance to the community scheme, equal to 80% of levy arrears at the inception of the agreement.

Every month the community scheme or its managing agent provides Propell with an updated report of arrears. Propell then determines whether it should make a further advance to the community scheme or whether the community scheme is required to make a repayment.

If the total arrear balance increased, Propell would advance an amount equal to 80% of the increase. Should the arrear balance have decreased, the community scheme would pay an amount equal to 80% of the decrease back to Propell.

Effectively, the Debtor Finance balance is adjusted every month to equal 80% levy arrears owed by owners to the community scheme, as illustrated on the graph.

Frequently asked questions

What is Debtor Finance and how can it benefit your community scheme?

Propell’s Debtor Finance provides community schemes with reliable and steady cash flow.

Debtor Finance is a revolving loan that provides up to 80% of home owners’ levy arrears.

The revolving line of credit allows community schemes to meet their budgets without requiring owners to cough up more or dipping into reserves meant for a rainy day.

By unlocking the cash tied up in levy arrears, there is no interruption to paying bills or performing maintenance.

Why would our community scheme need Debtor Finance?

When some property owners don’t pay their levies, it places undue pressure on the community scheme.

With cash tied up in arrear levies, it is unfair to rely on paying owners’ contributions to cover all expenses and it often leads to further default.

The legal cost for the collection of arrears, which is seldom adequately budgeted for, creates a further burden.

Without the budgeted levy income, there are three possible scenarios:

  1. Paying owners have to cough up more
  2. Dip into reserve funds to cover the shortfall
  3. Cut back on planned projects or other expenses

Levy default could lead to a vicious cycle in which buildings are not adequately maintained and bills are left unpaid, leading to a deterioration of property value. Dilapidated buildings further promote a culture of non-payment and can attract undesirable attention.

How does Debtor Finance work?

Debtor Finance is a loan facility to cover the shortfall left by owners who default on their levy obligation.

Propell makes an initial advance to the community scheme, equal to 80% of levy arrears at the inception of the agreement.

Every month the community scheme or its managing agent provides Propell with an updated report of arrears. Propell then determines whether it should make a further advance to the community scheme or whether the community scheme is required to make a repayment.

If the total arrear balance increased, Propell would advance an amount equal to 80% of the increase. Should the arrear balance have decreased, the community scheme would pay an amount equal to 80% of the decrease back to Propell.

Effectively, the Debtor Finance balance is adjusted every month to equal 80% levy arrears owed by owners to the community scheme.

Debtor Finance assures the community scheme of reliable monthly cash flow;

If the owners don’t pay their levies and the arrear balance increase, a further advance is made by Propell.

If the community scheme recovers arrear balances from owners, a loan repayment is made to Propell.

What is the cost to the community scheme?

There are no initial, monthly or annual fees and no early-settlement penalties. Interest is the only charge to the community scheme.

The interest charged on the Debtor Finance facility is typically offset by the interest recovered by the community scheme from owners with arrear balances.

Since interest is recovered from arrear owners, there is effectively no cost to the community scheme or to owners with no levy arrears.

Community schemes benefit from Debtor Finance even if they have no levy arrears.

There is no cost to keep the facility in place and if owners default on levy payments in the future, the community scheme will have the assurance that the Debtor Finance facility will restore their cash flow.

How is interest calculated?

Interest is calculated daily on the outstanding balance on a nominal annual compounded monthly basis and capitalised in arrears.

Who are the parties to the agreement?

Debtor Finance is a loan agreement between the community scheme and Propell.

Propell does not enter into any agreement with individual owners. The owners are liable for their levies to the community scheme, not to Propell.

Do we still need our managing agent?

Managing agents provide financial, secretarial, administrative and other management services to the community schemes.

Propell is not a managing agent and does not take over the function of the managing agent.

Although we work closely with managing agents, our function as a credit provider is different than that of a managing agent. We take care not to overstep into the managing agent’s function, processes and role in the value chain.

The cash flow provided by Debtor Finance assists the managing agents to render their services efficiently.

When does the Debtor Finance loan come to an end?

Debtor Finance is not a loan with fixed repayment terms. It is a revolving facility which remains in place until it’s terminated by either party.

Propell will review the facility at least once, annually.

Who is responsible for collecting levies from owners?

The community scheme or its appointed managing agent will continue to collect levies and arrears from owners. Propell does not perform any levy administration or collection functions.

The funds provided by Debtor Finance assist the community scheme in pursuing collection action against arrear owners.

Would Debtor Finance place a burden on owners?

Debtor Finance is a loan agreement between the community scheme and Propell.

Only owners with levy arrears are liable for interest towards their community scheme.

Debtor Finance places no additional liability on these owners and those owners with no levy arrears, can’t be liable for interest and are also not charged any fees.

 

The community scheme and all its owners should benefit from the reliable cash flow Debtor Finance provides. Since Debtor Finance plugs the shortfall left by defaulters, owners who are up to date with their levies are not burdened by the arrears of others.

How does Debtor Finance affect our accounting?

Debtor Finance does not affect the accounting of owners’ levy statements at all.

The Debtor Finance loan should be included as a liability on its balance sheet and the funds received will increase the assets (bank account).

The community scheme will have an interest income (Interest raised on arrear accounts) and an interest expense (interest paid on the loan).

The interest income should always exceed the interest expense since the Debtor Finance facility is limited to 80% of arrears.

Project Loans

Don’t let your budget get in the way of your big plans.

Propell - Project Loans

Project Loans, so how do they work?

Project Loans are unsecured revolving loan facilities provided to sectional title schemes and homeowners associations.

Community schemes can access funds immediately to complete projects like maintenance, upgrades, repairs and energy-saving solutions.

Or, they can utilize the Project Loans to settle municipal arrears or fund professional services such as legal fees and consulting fees.

Community schemes can draw from the revolving facility when- and as often – as needed. They can select a repayment term for each drawdown to meet its needs.

Project Loans are the fastest, most efficient and cost-effective way to have work completed.

Benefits

  • Funds are immediately available 
  • You decide when and how much to draw
  • Flexible repayment terms of up to 5 years
  • Only pay interest for what you use and when you use it
  • No surety or cession of levies required
  • No penalty for early settlement

How to get started

  • Contact Propell to apply for a Project Loan for your community scheme
  • A revolving facility is approved, and the funds are available immediately
  • The community scheme can drawdown as required
  • The community scheme can select its preferred repayment term
  • Repay each drawdown in equal monthly instalments

Propell | Building Trust

Get in touch

Speak to our expert team and find out more about how our products can be of benefit to you.