Indianapolis,
IN, USA -- Equities First Holdings, LLC (EFH,
http://www.equitiesfirst.com),
a global lender and a leader in alternative shareholder financing
solutions, is seeing more traction in margin loans and stock-based
loans in an economic climate where banks and other institutions have
tightened lending criteria. For borrowers who need to raise capital
quickly or who may not qualify for more conventional credit-based
loans, equities lending is gaining popularity as an alternative.
While
some options still exist for these individuals, recently, many banks
have cut their lending options for borrowers, tightened loan
qualifications, and increased interest rates. Al Christy, Jr.,
Founder and CEO of EFH, sees loans collateralized by stocks as an
innovative borrowing alternative for individuals seeking working
capital. Stock-based loans typically have a higher loan-to-value
ratio than margin loans and offer a fixed interest rate, providing
certainty throughout the life of the transaction.
"During
a typical three-year loan term, market fluctuation is inevitable, but
stock-based loans provide a hedge because the borrower is lowering
his or her investment risk in a downside market," said Christy.
"Most stock-based loans have a non-recourse feature that allows
a borrower to walk away from a stock loan at any point, even if the
stock's value depreciates. The borrower is able to keep the initial
loan proceeds with no further obligation to the lender."
As
Christy notes, some consider margin loans and stock-based loans to be
synonymous. Although both forms of financing use securities for
collateral, there are marked differences.
With
a margin loan, the borrower must be pre-qualified, as with a
conventional bank loan, and may require the money to be used for a
specific purpose. The interest rates are variable and the borrower
can expect loan-to-value ratios between 10 and 50 percent. In
addition, the lending firm may liquidate the borrower's collateral
without warning in the event of a margin call.
With
stock-based loans, borrowers can expect a fixed interest rate between
three and four percent and a loan-to-value ratios ranging from 50 to
75 percent. There also are no restrictions on the loan, so the money
can be used for any purpose. In addition, most stock-based loans are
non-recourse, so borrowers can walk away without obligation, even if
the value of the collateral stock has decreased.
"Any
form of financial transaction has some risk associated with it,"
said Christy, "But stock-based loans have been historically
ignored as a viable borrowing option largely because a number of
unscrupulous lenders have unceremoniously dumped borrowers'
collateral into the open market, failed to return stocks upon
transaction maturity, or failed to address other concerns. We have
built our business on a code of integrity and transparency and we
rely on leading legal, regulatory, and trading institutions for
counsel. Our mission is to deliver maximum benefit with minimum risk
so our customers can meet their personal and professional financial
goals."
About
Equities First Holdings
Since
2002, Equities First Holdings, LLC (EFH) has provided clients with
alternative financing solutions, supplying capital against publicly
traded stock to enable clients to meet their personal and
professional goals. EFH provides capital against shares traded on
public exchanges around the world. The company has completed more
than 650 transactions worth more than $1.4 billion to date, offering
customers high loan to values at low fixed interest rates.
EFH
is a global company with offices in nine countries, including wholly
owned subsidiaries Equities First (London) Limited, Equities First
Holdings Hong Kong Limited, Equities First Holdings Singapore
Limited, and Equities First Holdings (Australia) Pty Ltd. For more
information, visit, http://www.equitiesfirst.com.
DISCLAIMER
This
release is intended for informational use only, and does not
constitute an offer, stated or implied, of any type. Equities First
Holdings, LLC and all of its subsidiaries work exclusively with
individuals classified as sophisticated investors. The Equities First
Holdings platform is not intended for retail investors.
Media
Contact:
Brandon
Russell
+1-317-429-3500
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