This type of lending
allows the borrower to use their investments to obtain funds for personal or
business use. Using investments as collateral the borrower may be able to borrow
money at low interest rate financing for up to 10 years which is very
much like home insurance that would provide benefits for years to come.
- Fixed interest rates between 3% and 5%
- Interest Only quarterly loan payments
- Loan terms of 3, 5, 7, or 10 years
- No closing costs, broker or transaction fees*
- Funds may be used for any purpose including real estate purchase, business expansion, etc**
- Non-Recourse Loan. The loan is only collateralized by the pledged securities - not real estate or other personal property
- Loans available for up to 80% of the securitiesí value
- The borrower keeps all dividends and upside market appreciation of the securities
How It Works
Loan-to-value ratio and the interest rate are driven by what securities are pledged. The more liquid and actively traded securities the higher the loan-to-value
ratio and lower the interest rate.
- No principal amortization or loan prepayment.
- At the end of the loan term the loan may be renewed, refinanced, or paid off.
- At pay off, the exact number of shares or collateral initially pledged is returned to
- Default trigger is set at 80% of the loan amount ≠ not 80% of the securitiesí value like typical margin loans. For example: securities value of $1MM, loan
of $800k, default trigger would be at $640k (80% of the loan amount). If the securities value fell below $640k the borrower could walk away from the
obligation of repayment of the loan and securities and keep the original loan proceeds ($800k) or contribute cash or securities to bring value back to $640k.
The stock must be free-trading without any restrictions and the borrower cannot own more than 10% or more in the company of the issuer.
Retirement funds (401k's, pensions, etc), do not qualify for this program.
Form listing the number and name of securities and stock symbol.
We will quickly determine the amount of the loan and the interest rate and
prepare a loan proposal for you.
If you agree to the terms the next step will be for you to provide proof of
ownership of your stocks, bonds or options. We will then verify the values
and within a few days the loan proceeds are transferred into your bank
Upon repayment of the loan at the agreed upon terms the same amount of stock
or other pledged collateral will be returned to you. It's that simple!
* For loan transactions under
$250,000 there is a Loan Administrative Fee.
** Proceeds of the loan may not be used to acquire publicly traded equity