Stock-Based Loans: An Alternative to Margin Loans
Need liquidity? Traditional banks not a good option? Have a stock portfolio? You could sell some of your holdings to raise cash. But if you believe that there's additional upside for your investments and you would like to avoid the tax consequences of selling securities, you could consider a loan utilizing the stock as collateral.
Essentially, there are two types of loans you can make using stock: margin loans and stock based loans. Your brokerage firm provides margin loans. They typically offer loans of up to 50% of the value of the stock. However, BCG working side by side with their premier affiliate can offer loans up to 80%. Loans between $100,000 and $10,000,000 are typically available. While many investors think of margin accounts when they look to leverage their investments, they are unaware that securities loans provide a more flexible alternative because they can offer a higher loan-to-value (LTV) ratio, lower fixed interest rates, and other significant advantages over conventional margin account loans. Securities -based loans are a type of hedging strategy because the borrower is reducing their risk of investment. Whether the loan proceeds are used for paying off debt, corporate financing, home remodeling, jumbo mortgage alternative or even purchasing more stock options, the borrower will increase their assets.
A securities-based loan is a fairly simple transaction. Virtually any publicly traded stock can be used as the basis for a loan. We can accommodate both large and complex transactions. By combining efficiencies and best practices with safe and innovative methods, we can structure, execute, and service virtually any financial borrowing need from inception to conclusion. Based on experience and a successful track record in returning collateral to the borrower, most loans require a term of at least 36 months to set a favorable interest rate and LTV ratio.
When the loan matures, the stock used as collateral is returned or an extension of the term or refinancing of the loan can be arranged based on mutual agreement. In the event of substantial decline in market value, clients can simply walk away from the loan with no additional expense because it is a non-recourse loan. If the client wishes to ensure the return of shares, our premier affiliate lenders can help tender additional shares or cash to keep the loan viable and avoid default.
Our stock based loans are handled by a team that is recognized around the world as a leading alternative source of working capital for businesses and individual investors.
As a pioneer in securities-based lending, our affiliate has developed exclusive advantages over conventional margin loans that make it the number one choice for investors.
We can now offer investors a fast, straightforward transaction: Within twenty-four hours of contacting us, we produce a guaranteed term sheet – with loan-to-values as high as 80 percent.
We then calculate your specific loan value from the three-day average of your stocks' price, with a fixed interest rate between 2.5 and 4.5 percent.
The bottom line: You receive your funding in five to seven days. No matter the size or complexity of your loan, our affiliate working side by side with BCG has the flexibility, resources, and expert service to help you realize your financial goals quickly and efficiently.
