Case study: A lender’s story

A lender, JL, shares his story of how he became a peer-to-business lender and his tips for building a portfolio in this emerging asset class.

“I heard about peer-to-business lending though a newspaper article in July last year and to be honest, I was a bit annoyed that I didn’t discover it earlier, such has been my enthusiasm for it since. It has added valuable diversity to my portfolio and provided a gross return of 11 per cent.

Historically, equity investment has been the mainstay of my investment portfolio, but in the much-changed global environment, I was attracted to the predictable nature of the repayments and the interactivity of the auction process.

First of all I started with small amounts to get a feel for the way the auction and secondary markets work. Also, I couldn’t tell which businesses represented a good investment and which the ones to avoid, so it seemed like a sensible approach.

So, my initial outlay was £100, but then I got the bug and before long I had invested £1,000. That quickly rose to £1,000 a day and by the end of the first two months of my time as a peer-to-business lender I had £100,000 lent out to businesses.

I could see the risks, but I felt the rewards outweighed the risk involved. This is where I learned my first lesson – I’ve suffered a couple of losses, and I put this down to my desire to quickly build a portfolio. Looking back, I even identified one company as a risk but I proceeded anyway. As a result I would recommend going slowly, not putting too much into any single opportunity and spreading risk as far as possible. My limit is 5 per cent into any single opportunity, but ideally this would be 1-2 per cent.

I’ve found using the secondary market is a good way to quickly build a portfolio, and you can get an indication for the likelihood of repayment too from the repayment history.

Another way I spread investment is to use multiple platforms. I view my peer-to-business loans as a whole, rather than separate portfolios broken down by individual platforms, with a goal to make a gross margin of 11 per cent. Some offer better loan security and others higher returns, so there is value in exploring the types of lending opportunities offered by different providers.

I don’t believe peer-to-business lending requires an individual to be a sophisticated investor, as long as they spread risk in their portfolio, and as long as the returns I receive continue to match my risk appetite I’ll continue to make the investments.

This market is a fantastic innovation and it’s good to know that money is going to UK businesses too, which we’ll all benefit from when the economy begins to grow again.”

The views expressed in this case study are the opinions of an individual and not of This does not constitute investment advice. Anyone looking for investment advice should consult a Independent Financial Adviser. 

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