The rising trend of stock-based loans as an alternative to bank loans

Equities First Holdings (EFH) a renowned international lender, is taking note of the pulling power behind margin and stock loans in a financial market where banking institutions have tightened loan preconditions and increased loan interest rates. Security-based lending is fast becoming a popular alternative for borrowers who want capital as fast as possible or those who may not meet the lending criteria for traditional credit-based bank loans.

According to the founder and Chief Executive Officer of Equities First Holdings, Al Christy, Jr., borrowers don’t necessarily have to sell bonds or stocks just because they need cash real quick. Alternatively, borrowers can borrow loans and use stocks, bonds or mutual funds as collateral. It’s quick, convenient and often comes at a fixed interest rate compared to conventional bank loans.

Al Christy further adds that although margin loans and stock-based loans use securities as collateral, there exist clear differences between the two financing options. In the case of margin loans, the borrower must meet the pre-conditions, similar to a traditional bank loan. Additionally, the loan may be stipulated to be used only for a particular purpose. The interest rates vary, and the lender can liquidate the borrower’s guarantee without warning due to a margin call.

On the other hand, stock-based loans come with a reduced, fixed interest rate. Borrowers can use the money for any purpose and thanks to the non-recourse feature, borrowers can walk away minus any obligation to the lender, notwithstanding the drop of the value of the collateral stock or bond.

The CEO of EFH admits that any type of financial transaction carries some sort of risk. However, he argues that security-based loans have been cast in a bad light as a viable lending alternative mainly either because several unscrupulous lenders have traded borrowers’ collateral in the open market or opted against returning stocks or bonds upon transaction maturity. In Contrast, Equities First Holdings is built on honesty and integrity, and the company strives to provide maximum benefit with minimal risk to its esteemed clients.

Since its establishment in 2002, EFH has offered its clients alternative financing solutions, giving loans against stocks and bonds traded on global exchanges as collateral in order to help clients meet their financial objectives. This unique tactic to non-purpose financing has seen over 600 dealings to date, providing customers with the reduced cost of capital at better interest rates.

EFH operates worldwide through its branch offices in Sydney, London, Perth, and Hong Kong, Bangkok and Singapore and provides financing arrangements tailored towards the needs of the individual borrower.

For more details please visit http://www.equitiesfirst.com/

1 thought on “The rising trend of stock-based loans as an alternative to bank loans”

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