Lately, economic fluctuations have made it tough for banks and other lending institutions to survive in the current lending market. To cushion their trading, they have had to re-evaluate and adjust their profit making avenues. Among the measures taken are increasing interest rates, tightening loan qualifications, and reducing lending options for clients. The bar is set so high such that alternative lending institutions have become a more viable option.
As the adage goes, ‘One man’s meat is another man’s poison,’ Equity First Holdings, a leading alternative lending institution, is experiencing increased profits due to more clients on stock-based loans.
The organization advises its customers to give preference to stock-based loans to derive maximum benefits from money borrowed. It has noted that a majority of clients disregard stock-based loans. Probably, this overlook is because they cannot differentiate between margin loans and stock-based loans. Maybe because of fear of the past where lenders would abuse borrower’s rights by not returning stocks when transactions matured, but instead dumped collateral into the open market.
“If seeking working capital, it is wise to go for loans collateralized by stocks,” advises Al Christy, Jr., Founder, and CEO of Equity First Holdings. “In comparison to margin loans, stock-based loans are the better option.”
In stock-based loans clients:
- Get a fixed interest rate of between 3-5 %.
- Can borrow and use money borrowed on what they please to do.
- Can simply walk away without any obligation tied down to them; when dissatisfied.
- Enjoy high loan-to-value ratios of between 50-75%
Whereas in margin loans:
- Interest rates are unpredictable meaning they can fluctuate at will.
- Loan-to-value ratios range between 10-50%.
- The borrower may be required to state how the funds shall be used.
- Borrowers always face the fear of margin calls. In a case of such a call, collateral liquidation is done without warning.
Al Christy further emphasizes that Margin loans can be likened to conventional bank loans where the borrower’s qualifications are strictly analyzed and evaluated before it is granted.
About Equity First Holdings LLC (EFH)
It is one of the world’s top alternative shareholder financing solutions. EFH began in 2002 with the aim of offering capital against publicly traded stocks and enable clients to access alternative financing solutions. So far, the institution has conducted over 650 valid transactions worth over $1.4 million. The company has offices in many parts of the world notably in London, Singapore, Hong Kong and Australia. To learn more, visit Equities First.