Over the past decade there have been a lot of changes to the credit markets, particularly when it comes to consumer loans. While personal loans were a staple of banks in decades past, most banks are no longer willing to provide these loans to consumers. While there are still some options available to consumers, they often come with very high interest rates and other requirements.
For those that are looking for a way to raise personal capital, a great way is to take out a loan that is secured by stock. A stock-secured loan is a unique loan product in which a lender will provide a term loan that is secured by a stock portfolio. In cases where a borrower goes into default, the lender will be able to sell the stock to repay the loan. Since they have a liquid source of collateral, many lenders are able to offer very low interest rates.
There are a lot of benefits to borrowers of stock secured loans. One of the main benefits is that it provides a stock portfolio hedge. When taking out a loan, a borrower is often able to receive a loan with a non-recourse structure. This means that if the stock portfolio goes down in value, the borrower could theoretically stop paying the loan and still keep all of the loan proceeds without having to repay any of the original balance.
One of the leading providers of stock-based loans is Equities First. While the company is based in the United States, they have a major presence all over the world, including in the UK, Asia, and Australia. The company has been providing stock-based loans for more than a decade and has already provided more than $1 billion in loans to both individual borrowers and small businesses that have stock portfolios.