Security Based Lending - The Equity Alternative


This type of lending is based on eligible securities such as publicly traded stocks, bonds, options and mutual funds.


PROGRAM HIGHLIGHTS

Below Market Interest Rates – fixed rates from 2.5% to 4.5%

High Loan Values – loan to security value ratios up to 80%

Non-Taxable event – as the securities are not sold

No Credit Reporting – nor is it reported to public records

Borrower Retains All Market Appreciation - borrower receives the benefit of any dividend or interest that the securities generate

This is a Non-Recourse Loan – a loan with no personal liability
Loan Proceeds May Be Used For Any Purpose - personal, business, etc.
Eligible Securities Include - publicly traded stocks, bonds, options and mutual funds.

Flexible Terms at Loan Maturity - the borrower may renew the loan, refinance, extend the terms or pay off the loan

Prompt Response to Your Loan Inquiry - usually within one business day of receiving the security information. Funds can be deposited into the borrowers account in three to five business days once the contract is signed and the transfer takes place.

Simple Steps

Complete the Express Quote Form listing the names of your securities, their stock symbol along with the number of shares

Upon receipt, a loan proposal will be quickly drawn up to determine loan amount and interest rate

If you agree to the terms, the next step will be to provide proof of ownership for each of the stocks, bonds or options included in list

Values will be verified and within days loan proceeds are transferred into your bank.



IT’S THAT SIMPLE!

• Low interest rates - usually between 2.5% -4.5%
• Rates are fixed— usually between 3-10 years, but may go longer
• High loan-to-values - up to 80%, which are much higher than banks and brokerage companies can offer
• Loans are interest only - principal payment at maturity—loans can be refinanced or extended
• Loans are non-recourse - giving the borrower the opportunity to “walk away” if the collateral falls below a set
floor amount
• You make quarterly interest payments to keep your loan current.
• Loans are “non-purpose” - they can be used for virtually any borrowing need (except for placing in a margin
account)
• Borrower maintains beneficial ownership - borrower keeps all upside market appreciation. In addition borrower receives credit against their interest payment for all dividends or interest on bonds. An added benefit is that the lender is responsible for taxes on the dividends during the loan term. It is a loan (not a
constructive sale) per section 1058 of the Internal Revenue Code.
• Loans can be financed in 5-7 business days
A securities loan is not a margin account. These loans have significant advantages over conventional margin loans.
We will first determine the viability of the loan and then calculate a loan-to value ratio and the interest rate, based on an assessment of both short– and long-term risks. Eligible securities include stocks, bonds, and trad able mutual
funds. Retirement accounts (401K) are not eligible.
Before a loan can be funded, a “strike price” (the per-share price that the value of the collateral will be based on)must be set. The lender uses a fair and equitable three-day average pricing model for every stock loan it transacts.
The strike price is based on an average of the closing prices of the collateral for three consecutive market days,beginning with the day it it transferred to the lender.
What happens at the end of the loan term?

You pay the loan back and the lender transfers back to the borrower the same number of shares pledged as collateral. However, depending on what your financial needs are at the time and how your collateral has performed during that period, there are a few other options:
• You can extend the term of the loan upon mutually agreed terms.
• In the event of portfolio growth, upon mutually agreed terms, you can refinance the loan at the end of the
term.
• In the event of substantial decline in market value of your collateral, you can simply walk away from the loan
with no additional expense because it is a non-recourse loan.
Margin Loans vs. Securities-Based Lending
• Margin loans can only go up to 50% of the value of the stocks - we are able to go to 80%.
• Margin loans are not allowed to lend on stocks valued at less than $10.00 per share - we offer the loan on
any share price.
• Margin loans rates are typically 5-8% ARM's - We are between 2.5 - 4.5% Fixed rate.
• Margin loans are FULL-recourse - ours are NON-recourse with NO personal liability.
The "call" on margin loans is set at 80% of the stock value and they have one day to cure the default. Our "call" is set
at 80% of the loan amount (approximately 60% of the stock value) and we offer 5 days to cure and since ours are
non-recourse loans if the borrower cannot cure the loan default they can simply walk away.