"We were very interested in Lee but it was going to be far too expensive for us. In the past we've gone ahead and done it but now if we can't afford to do it then we won't," said Gregory.
"We have to address the problems of the past of overspending. I think Lee was keen to come to QPR, but as it turns out, we have taken Jimmy Smith from Chelsea, who cost us a fraction of what Lee would have cost.
"So I'm delighted at getting Jimmy. He is never going to replace Frank Lampard or Claude Makelele or Michael Ballack or Michael Essien so it's probably more beneficial to him to come and play in our first team.
"He will be great for us. He came on for half-an-hour at the weekend and looked like he enjoyed himself and we certainly enjoyed having him.
"He's a smashing kid and he has a lot of potential and can do a very good job for us over the next month.
"Hopefully I can look to extend the loan to the end of the season. Whether it becomes permanent is down to Chelsea.
"Obviously they don't have to worry about the money but they might find it's in Jimmy's best interests to let him go and get a career elsewhere and might let him go for nothing - but we will have to wait and see."