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Published By Credit Suite at December 30th, 2015
Securities Based Loans are an excellent source of funds for someone who holds publicly traded stocks.
Securities-based lending is generally going to involve a revolving line of credit. So this uses your eligible investment portfolio as collateral.
This funding option permits you to access funds without immediately liquidating your portfolio.
In turn, this gives you the ability to access liquidity. And you can do so while maintaining your portfolio’s current exposure to the market.
You will continue to receive the benefit of any dividends, interest or capital appreciation that may accrue in the account.
Some of the other main benefits of securities financing include the following.
This is a non-recourse, non-recorded loan and the lender cannot come after you personally. Plus, they can’t report you to the credit bureaus in case of non-payment.
But if you default, you get to keep the money. Yet the lender gets to keep the stock as the sole remedy.
At the end of the loan period, the borrower will get back shares from the lender. Yet these are the same number of shares first pledged as collateral. So this automatically includes any appreciation as well.
So, this kind of financing is a great choice for many business owners. It works especially well for foreign nationals. And it can work for borrowers with limited or undocumented income. Plus, there is no credit check. So you qualify even with challenged credit.