It comes a time where either an individual or a corporation is faced with the issue of raising capital. A new strategy to acquire liquidity has come up as reported by Equities First Holdings (EFH) LLC. With banking institutions and other credit institutions having revised their lending criteria, borrowing has become problematic as a result of increased interest rates and tightened loan qualifications.
As with any problem, an opportunity rises, borrowers who need instant cash and do not qualify for the conventional types of credit-based loans; equities lending is gaining traction as an alternative to the borrowers. Equities lending is taking a loan with your stock options serving as the collateral. The founder of EFH, Al Christy Jr. who also serves as the CEO sees equities lending as an innovative way for borrowers to access working capital.
Banking institutions such as EFH sees loans collateralized by stocks as an attractive financial package since they offer a fixed interest rate meaning the loan is as secure as can ever be throughout the loan agreement. The stock-based loans also have a higher loan-to-value ratio than margin loans and credit-based loans.
According to Christy, stock-based loans are attractive to borrowers not only because they allow the borrowers to receive instant cash, but also because most of them have a non-recourse feature. This feature gives freedom to borrowers to walk away from the stock loan at any point even if the stock’s value goes into freefall. If the borrower activates the recourse clause, he or she is free to keep the loan proceeds with no liability to the lender.
About Equities First Holdings (EFH)
EFH is a global capital lender and leader in alternative financing solutions that was founded in 2002. It provides clients with innovative solutions to acquire capital by taking their publicly traded stocks as collateral. The companies lending model is based on offering its clients a high loan to value and low fixed interest rates.
These friendly terms have seen Equities First Holding complete over 650 transactions successfully amounting to over $1.4 billion. Since its inception, the alternative financing company has grown and is now in nine countries around the world.
For more information please visit http://www.equitiesfirst.com/