Stock loans are an underused form of raising business capital. The capital is raised by exchanging non-marginal stocks for a non-recourse loan. This creates a great opportunity for businesses shuddered by banks and institutions.
Do you hold non-marginal stocks and need an injection of capital? Want to understand how the process works and the fees you can expect?
You'll include this form of fundraising on your list of potentials by the end of this article. Let's check it out.
A stock loan falls under the securities lending umbrella.
Traditionally, stocks are lent to a borrower for a small fee. The investor uses stocks to position trades for income earning activities like shorting. The stocks exchanged with the investor are publicly traded or securities.
Stock loans follow this parallel with one major difference: a business provides a loan for the non-marginal stocks.
Here's how it differs:
The stock acts as the loan collateral
The loan forgoes a credit check and reporting
The exchange is kept private and confidential
A business using this fundraising receives a loan based on a loan to value ration. This accounts the non-marginal stock and securities market value and performance.
Securities lending follow similar fee structures. A traditional agreement will use interest and tenure to reach an agreement. The borrower pays a fee for use of the stocks. Borrowers also pay equal amounts earned by dividends.
The stock loans offered through Stock Loan Solutions take a different approach.
Our process and fees are as follows:
Our in-house team of underwriters determines the LTV of your holdings
We present a quote ranging from $50k-$5mil
You decide to meet an agreement
A repayment schedule of 24, 36, or 60 months are chosen
You pay interest payments quarterly until the loan is repaid
Stocks transfer back to you upon repayment
This process does not have up-front fees and typically closed and funded within 48 hours. Our stock loans fees are determined by the current prime rate.
Interest is paid alongside the principle and compounds monthly.
Our fee, using the current prime rate, makes stock loan an elegant solution for fundraising. Though, every client can expect different fee structures based on several factors.
These factors include:
Liquidity of stock
Once the loan agreement is established the repayment fees and rates do not change. Those unable to repay their stock loan in the determined time may choose to rework the loan terms. Or, offer their stock as repayment as they were first established as collateral.
An owner may choose to sell stock to provide the capital to stay afloat. However, this process may take weeks to complete -- a chunk of time one cannot afford.
Stock loans provide a quick way to inject capital into your business. The loan never reports publicly to avoid investor uneasiness. The respectable terms and access to capital make this a prime opportunity.
Would you like to know more? Or, feel you're ready? Pick up the phone (1-866-446-1009) and contact us, today, to learn your options.
The information contained herein is presented solely for the purposes of discussion and under no circumstances should this be considered an offer to buy or a solicitation of an offer to sell any security. Stock Loan Solutions is not a registered securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. Stock Loan Solutions, its managers or affiliates have not been registered and do not plan to be registered under the Investment Advisers Act of 1940 or any similar state or foreign securities laws. Stock Loan Solutions is not registered under the Investment Company Act of 1940 or under any similar state or international securities laws. Stock Loan Solutions does not offer any form of investment (buy or sell) advice, tax counseling, estate planning, or any other securities or financial advice whatsoever. No statements on this website or any verbal or written statement by any representative shall be construed as such advice. We are neither licensed nor qualified to provide investment advice.
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