Time limited investment cap / Q&A

Agree with both suggestions but would think 10% was too much.

I agree with the principles of both - what's not to like about Q&A, and would probably  save SS repeating themselves I would think, as well as being beneficial to all investors. I think the cap is also an excellent idea, but in the case of the recent boat debacle where the loan was £16k - 10% would probably result in the ten fastest fingers, and even 5% not much improvement with potentially only 20 loan parts. I don't know how many investors SS have, but £100 for the boat loan might have been more appropriate or £500 max (as this would only give 32 'opportunities' anyway). In any event I think a £ rather than % amount appropriate to each loan might be better. Of course the best solution would be to have a lot more loans!

I agree, I would definitely invest more with a cap simply because I'd have more to invest in! 1% sounds reasonable to me too, it may keep large investors out of tiddly loans altogether, but that's no bad thing if it allows the little guys in.

I have been reflecting on whether there was an objective way to determine the size of the short term maximum in an initial period. I have also been reflecting on how the scramble for extra loan parts would happen 24 hours later(if that is the designated period)

My conclusion - there probably is no ideal way of handling this, but there is a suggestion later below.

The thoughts went like this. SS has currently approx 700 investors signed up. I am not sure what proportion actually invest. Say 200. However SS is growing fast and could double the number of active investors at the end of year, say 400.

So if 400 people want to get onto a small loan there will be disappointment. Even at the 1% level there will be a large number disappointed. Extra loans will help. SS seem to have been consistently producing 4 or 5 a month, so I am not sure whether this will grow at the same rate that the number of members will.

So back to first principles – what is the real problem. The real problem occurs when there are small loans and these get hoovered up by big investors or maybe an institution. The bigger property investments don't seem to be a problem. So the logic suggests placing a limit on small investments only. So I could argue that any loan requirement of less than 50k should be subject to a limit. This figure embraces virtually all the boat loans but excludes the property loans which are much bigger and not a problem.

Rather than have the complication of a 24 hour period, maybe it is better to set a maximum for any lender for the whole period for these small loans.

I have also come round to the view expressed by star dust that maybe setting this in pounds is better than having a variable percentage for every loan. Everyone then knows what they can invest and can then plan their finances appropriately.

This still leaves us with the question about what that limit would be. If it was £500 maximum that is 1% of a £50k loan but 2% of a 25k loan and 4% of an ultra small 12.5k loan. Maybe that is OK, but as we don't know the investor profiles of previous SS loans it is difficult to know. However it may be a compromise between those who believe 1% is reasonable and SS needs to fill a loan relatively quickly. If a loan does not fill within 48 hours SS can send email notifications to draw attention to more loan availability.

I guess it is now over to SS to form their own views and try it out on a small loan requirement and go from there.

I feel the same - I really value the simplicity compared with the alternatives and it would seem a shame to start introducing more complexities.  When I first started lending here last year there weren't many people willing to take the risk so it was easy to get a slice of any loan I chose, but now I miss out on some of them as more lenders get on board.  That's fine - it isn't really necessary for me to take on every loan.  Particularly since we are only notionally diversified - in reality we are just lending into the SS pot.  The value of the diversification in this case is to give a stream of different repayment dates.  I try to get the odd boaty loan when they come up, mainly so that I have something that will be easy to sell later, but I don't worry if I can't.

For me, it's just fine as it is, but that's because there's mostly a large loan of some sort going on when I have available dosh to invest.  If we get back to the point where there isn't then I might appreciate a capping system for the next one that comes along