Big or Small? Choosing a Stock-based Loan Program

Big or Small? Choosing a Stock-based Loan Program

When you’re interested in taking out a stock-based loan to acquire immediate liquidity, you’re faced with several options. First, there’s the question of deciding which lender to borrow from, as well as whether or not to borrow against securities or attempt to sell them outright.  

At Easy Stock Loans, we serve the interests of people who are seeking confidential, non-recourse securities-lending options for those who don’t otherwise qualify for lending programs. We strive to provide fair interest rates, transparent terms, and secure options to those who need access to liquidity to fund both personal and professional endeavors.  

Why Not Borrow from a Major Bank?  

Disadvantages of Borrowing from Major Banks

For the most part, the largest financial institutions don’t offer stock-based loans for non-marginable securities. Instead, they offer simple margin loans, which must sell for at least $5 per share.  

Disadvantages of Borrowing from Major Banks

Margin loans from large banks often have rigid rules governing them – including extraneous fees, strict requirements around the type of asset in question, high interest rates, and risks of margin calls. Furthermore, margin loans are not non-recourse, meaning more is at stake than the pledged collateral if the loan reaches maturation without being paid off.  

These factors often deter individuals from seeking out liquid access from many brokerage firms and major banks because the net sums acquired aren’t enough to adequately cover the need for immediate liquidity, be it for urgent purchases or other pressing financial needs.

Advantages of loaning from a reputable brokerage firm

On the other hand, loans against non-marginable securities from a smaller, reputable brokerage firm can provide sufficient liquidity at a reasonable interest rate in a way a major bank wouldn’t agree to.   

While some banks are adopting the trend of adding a securities-based lending program, many of the caveats from traditional margin loans remain. The risk of sudden margin calls is still present, as well as hidden fees and severe recourse taken against payment delinquency. This means a smaller firm like ours is the safest lending option.

Stock-Based Loans vs. Selling Stock  

One of the most compelling reasons to pursue securities-backed financing over selling investments is to avoid taxes on capital gains. We offer competitive interest rates beginning at just 4% and will return ownership of stock back to you after the loan reaches maturation. Ultimately, this means appropriating non-marginable securities for collateral results in more capital than outright selling because of our low interest rates. You also retain the integrity of your portfolio, meaning you’ll pay no tax penalties for selling, and the diversity of your portfolio won’t be affected.  

Stock Based Loan Advantages
✓ Avoid taxes on capital gains.
✓ No Credit Checks.
✓ Competitive interest rates starting at 4%.
✓ Returned ownership of stock after loan reaches maturation.
✓ Assisting in providing loans where major banks may not.

In some circumstances, we can even help you borrow against restricted stocks. It depends on a variety of different factors that we don’t otherwise consider for our stock loans, like credit history, pre-existing debt, and the precise restrictions placed on the stock, but it is certainly possible.  

If you’re interested in pursuing non-recourse securities lending or have questions about how the process works, please contact one of our loan advisers for more details. Easy Stock Loans is determined to find personalized solutions for those who require more liquidity but don’t qualify for mainstream lending programs.

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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. Easy Stock Loans is not affiliated with the named representative, broker – dealer, state – or SEC – registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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