You need a quick loan. Bank loans are all but impossible because of limitations on available credit and the need for strong collateral. If you have a brokerage account and own stock, you can ask your firm for the loan and use your stock as collateral. Here too there too there are drawbacks. The firm normally will limit your loan to 50% of your shareholder value. In addition, their interest rates are high ranging from 6.5 to 9%.
Equities First Holdings can meet your need for quick cash with interest rates as low as 3-5% and does not have restrictions on the amount of your loan based on your stock holdings. They have made loans up to 80% of your shareholder value. Their average is 60%. In dollar terms their loans have been as high as $8 million.
The next question is: How does this work? With a regular $5,000 Cash Account you can buy up to $5,000 worth of stock. The second type of account is a Margin Account. This allows you to buy 50% more stock. With a $5,000 account, you could buy up to $7,500 of stock. In good times when markets are going up you can make more money faster. However, in a down market you can lose it faster also.
Equities First Holdings (EFH) treats loans on Cash and Margin Accounts differently. The reason is simple. There is much more risk lending against a Margin Account. Under a Cash Account if the stock does well EFH returns the entire amount of the collateral. The borrower can pocket the profits. On the down side if the stock falls below 80% of loan value, the borrower can pay the difference to get the loan out of default. Or he can walk away from the loan and the stock. This type of loan allows the borrower to abandon the loan before it expires.
Margin loans have different requirements. First, the borrower must be pre-qualified and require that the money be used for a specific purpose. The loan to value is much lower- 10-50%. If there is a margin call, the lender may liquidate the loan without warning.
A final word. Equities First Holdings is a respected leader in alternate shareholder financing with having brokered $1.4 billion in loan value.
for contact: equitiesfirst.com/contact