Borrowers are finding it difficult to secure loans as banks and other financial institutions are getting stricter with their lending criteria. This is why stocks are being considered as an attractive alternative for getting loans.
Equities First Holdings, LLC is a global lender. They are the leader in providing alternative financing solutions. They see a surge in margin loans as well as stock-based loans. This is because the economic climate has forced banks and such other financial institutions to tighten their lending criteria. There are some borrowers who need capital quickly. There are others who may not be able to qualify for getting the conventional loans that are credit-based. For such borrowers, equities lending is becoming the new, popular alternative.
Still, there are a few other options still available for these borrowers. There are many banks which have cut down on their lending options. They have tightened their loan eligibility qualifications. In addition, they have increased their interest rates too. Read News Here .
This is why loans with stocks as collateral are becoming the alternative for individuals who need working capital. These stock-based loans tend to have a much higher ratio of loan-to-value as compared to margin loans. Besides, they offer a fixed interest rate too. This means that there will be certainty for the entire life of this transaction.
The fact is that during any loan term, there will be market fluctuation. But these stock-based loans are providing a hedge as the investment risk of the borrower is lowered in downside market. In addition, these loans tend to include a non-recourse feature. This means that a borrower can walk away from this loan at any point. It does not matter if the value of the stock depreciates at any given time. It is the borrower who keeps the proceeds of the initial loan. No wonder this is such an attractive option!