FAQs FOR STOCK LOANS
What is a Stock Loan?
A stock loan is a non-recourse loan issued at the borrower’s request for any publicly traded securities the borrower wishes to pledge as collateral. The borrower retains ownership of the securities and can choose to forfeit them against the repayment of the loan without any other liabilities or effects on credit ratings.
What kind of stocks and securities are eligible for a Stock Loan?
All stocks and securities that are publicly traded are eligible for stock loans, but the minimum loan amount is $300,000 and you can borrow up to 80% of the stocks’ value.
What kind of liabilities do I have in a Stock Loan?
SSince we offer non-recourse loans, you have no liabilities apart from the securities that you pledge as collateral. In the event of a default, you can walk away without any other consequence.
Are Stock Loans reported to the credit bureaus?
These non-recourse loans do not affect your credit ratings because they are not reported, even if you default and there are no public records.
Do you accept foreign securities as collateral for Stock Loans?
Yes, we accept a wide variety of foreign securities and stocks that are publicly traded. Please contact us to request more details. All stock exchanges are eligible.
Are Stock Loans reported to the credit bureaus?
These non-recourse loans do not affect your credit ratings because they are not reported, even if you default and there are no public records.
Do you accept foreign securities as collateral for Stock Loans?
Yes, we accept a wide variety of foreign securities and stocks that are publicly traded. Please contact us to request more details. All stock exchanges are eligible.
What is the Loan to Value (LTV) percentages for a Stock Loan?
The LTVs depend on the case in question and vary according to the quality of securities you pledge as collateral. But we can go as high as 80% for some stocks.
How are the stocks evaluated?
There are several factors stock lenders look into, with the main ones being 24-
hour trading volumes (preferably over $100,000), price of the stocks, exchange,
high or low volatility and fill-rate.
The higher quality stocks you pledge, the better the terms you receive, for
instance Blue Chip stocks get the best terms and LTVs.
What interest rates should I expect to pay for a Stock Loan?
Interest rates also depend on the quality of stocks you pledge and can be as low as 3% per annum.
Do I need a credit report?
You do not undergo any qualifications for these loans, so no credit reports are required at all.
Do you verify my income and employment in order to obtain a Stock Loan?
No, we don’t need to verify any income or employment. You need no documentation for our stock loans.
How long does the loan process take?
Our stock loans are closed very fast and can be processed in a matter of days depending on how fast the borrower completes his end of the paperwork.
Is there a restriction on the use of the cash loan proceeds?
No, there are no restrictions on the loan amount and you are free to use it how you want. You can withdraw it or transfer it anywhere you like.
If my pledged stocks get a dividend during the loan term, will I get it?
Yes, you retain ownership of the stocks and securities during the loan term and the custodian will credited you with any dividends issued.
What happens if I fail to make payments and default on the loan?
You just walk away if you fail to make payments and default. You forfeit your stocks which you pledged as collateral and that is it. There is no other personal liability on you.
Which stocks are NOT eligible for a loan?
Private stocks or restricted stocks that are not traded publicly are not eligible. Also paper stocks, because only stocks in electronic form are eligible.
What are the risks involved with Stock Loans?
Any transaction involving securities has risks, however stock loans are considered minimal risk because they are non-recourse and you have no personal liability.
Who owns my stocks during the loan term?
It depends on the type of loan you choose. If you wish to retain the title, you are allowed to do so, but your LTV may be slightly lower. If you transfer the title to the lender, you get higher LTVs and lower interest rates but you also retain benefits of the securities, such as dividends.
What happens if I default on the loan?
As mentioned earlier, we offer non-recourse loans, which means you have no personal liabilities if you default. If you are concerned about tax issues, we would recommend consulting a tax professional.
What happens if the value of my stocks falls?
There is an agreed minimum value and if the stocks fall under that, a default is triggered. Often the minimum is 50-75% of the loan, after which the borrower has the choice to offer more cash or other securities to keep the loan viable or forfeit the collateral stocks. Before the loan is executed, the buyer and lender agree upon fair market values and minimums.
Please feel free to contact us for more details and get help from our experts.