Steve Lee is the MD of Jumbocruiser Ltd., the largest British owned luxury sleeper coach operator in Europe. As he gets closer to retirement, he’s looking for ways to invest his spare cash effectively.
Since summer 2012, Steve has been actively participating in peer to peer lending using a variety of P2P / P2B platforms to invest funds on behalf of himself, his company Jumbocruiser Ltd., the Jumbocruiser Retirement Benefits Scheme (where allowed) and Spenion Unlimited.
Steve has recently become an active FundingKnight lender and has kindly agreed to share, in his own words, some of his thoughts about crowdlending:
FK: When did you first start experimenting with peer to peer finance?
Steve: Summer 2012
FK: Other than FundingKnight, which websites do you use regularly?
Steve: Funding Circle, Marketinvoice, Thincats. I also have interests in Zopa and Ratesetter that I am running down.
FK: You’ve recently started lending through FundingKnight, a relative newcomer in the P2P space. What do you need to see from a new entrant before you are willing to invest?
Steve: I always look up the company history and look at the track record of the people behind the company and do a bit of research in the same way I might if investing in shares or loans on other platforms. When it comes to loans on the platforms, I am slowly learning to use common sense as well. On one platform I bid £5,000 on a company that was set up just to do a major conference with global speakers (i.e. Bill Clinton) designed for budding entrepreneurs. This was before I looked at the project carefully. On reflection I realised I should never have placed the bid as the opportunity was fraught with danger – who was going to cough up £250 to hear people with no entrepreneurial skills like Bill Clinton speak? I am more careful now and as a minimum I get a credit rating and require a track record of the people involved and even then spread myself out thinner initially.
FK: Why does P2P finance appeal to you? Is it solely about the return on investment or does helping small businesses / getting more involved in actively managing your money matter too?
Steve: I have to apologise but despite being a former hippy activist, I do not do it for the kharma but merely due to the fact that I need to invest my spare cash effectively before I retire. I believe there is a short term window of opportunity until the government and banks get their acts together where I can overall hit around the 10% return mark before tax and I am taking advantage of it.
FK: Are there benefits to be had from dealing with smaller companies like P2P lenders rather than big, mainstream banks?
Steve: It depends on (a) rates and (b) security required when lending to profitable businesses. For new businesses P2P will probably remain the ONLY way to get capital invested. There are many lenders out there who will do auto-lending, so those loans will be covered once they get past the platform’s own initial evaluation for loan acceptance. Nearly all my failed loans (on other platforms) were auto-lent so I no longer do that but some people just do not have the time to mess around so I still see a value in auto-bidding for the lenders and the platforms and the borrowers.
FK: Are there any FundingKnight features you particularly like?
Steve: I’m impressed with the way that the loan exchange works, letting you buy and sell loan parts. Say I have £500 to bid, I often want to do 5 x £100 bids at the same interest rate. On most sites I have to do it manually five times and keep scrolling to the bid rate which on a tablet or phone is not easy.
FundingKnight allows you to split up an investment and only sell part of it on the loan exchange, giving you the option to state exactly how much you want to sell at any one time. In my opinion that makes it a superb solution, the best one available on any of the platforms I’ve used.
FK: What would you say to potential investors wondering whether to try P2P Finance?
Steve: Spread your loans thinly. Look at who you are lending to. Feel comfortable about the lending platform that you will initially be sending your money to. Do not be greedy and bid a lot on loans which have high interest rates but carry a bigger risk. Subscribe to a database like Company Check and if things look to be going downhill, do not delay selling on a secondary market (loan exchange) even if you are getting a high rate of return.
It is quite difficult to lend out a lot of money quickly so use a site with a secondary market (loan exchange) and accept lower rates for now so you all get all your money lent out and then slowly sell the loan parts when rates are higher elsewhere. It is a juggling act but it can be done.
FK: Thank you Steve, we really appreciate you taking the time to share your thoughts with the FundingKnight blog. Good luck with your crowdlending investments in the future.
Note: The answers above represent Steve’s own personal views and opinion and in no way constitute advice.
More about Steve:
Steve Lee is MD of Jumbocruiser Ltd, one of Europe’s leading sleeper coach companies with coaches from 8 to 16 passengers. If you are interested in finding out more, please use the online quote form to get in touch.