Category: Equities First

Why you should choose Stock-Based Loans instead of Margin Loans

Published / by CapaConf

Equities First Holdings is an international leader and lender in alternative shareholder financing solutions. The company is experiencing more traction both in the margin and stock-based loans in an economic climate where financial institutions have tautened the lending rules. Not all borrowers who want to raise capital fast qualify for conventional credit-based loans. For this reason, many people opt to use the service of equity lending institutions, and this is making them gain popularity.

Even though some alternatives are still available for these people, many financial institutions have slashed their lending options to debtors, increased their interest rates and tightened loan qualifications. Usually, stock-based loans are characterized by a high loan-to-value ratio as compared to margin loans. The stock-based loans provide a fixed interest rate, offering certainty through the entire transaction.

Note that market fluctuation is unavoidable during the typical three-year loan duration, and you cannot do anything about that. However, the stock-based loans offer a hedge since the debtor is required to lower his or her investment risk when the market is on a downfall. Al Christy, Jr., founder of Equities First Holdings points out that the majority of stock-based loans come with a non-recourse feature. The feature allows a debtor to walk out from a stock loan at any point even if the value of the stock depreciates. With the stock-based loan, a borrower can keep the initial loan proceeds with no further obligation to the creditor.

As Christy points out, some people may think that margin loans and stock-based loans can be synonymous. Even though securities is used as collateral for the two forms of financing, they are entirely different. You need to be pre-qualified for you to get a margin loan, and the money you get must be used for a particular function. In most cases, the interest rate on margin loan varies, and one can expect loan-to-value ratios between 10-15 percent. On top of that, the lending company might decide to liquidate your collateral without warning in the event of a margin call.

 

About Equities First Holdings

Since Equities First Holdings was established, it has been providing alternative financial solutions to its customers. The company also supplies capital against traded stock to help the clients achieve their personal and professional goals. Currently, Equities First Holdings has completed over 650 transactions valued at 1.4 billion US dollars, giving customers a high loan to values at a minimum fixed interest rate. Equities First Holdings is an international firm with branches in nine countries. It has branches in Singapore, China, and Australia.

You may found more information at http://www.equitiesfirst.com/