liquidity Solution Questions

Subject: stock loan questions

Eligible Securities

Eligible Security Type

Up to
U.S. Treasury notes/bills

95% LTV
Treasury strips
92% LTV
Fannie Mae, Ginnie Mae CMOs (Agency Paper Only)

90% LTV
U.S. stocks and selected non-U.S. stocks
(Including Penny Stocks/Pink Sheets with minimum $35K/day trading
volume – Please inquire for details.)
85% LTV
U.S. municipal bonds
80% LTV
Corporate/Non-convertible bonds
70% LTV
Foreign sovereign debt
70% LTV
Convertible bonds
50% LTV
Exchange-Traded Funds (ETFs)
50% LTV
Unit Investment Trusts (UITs)
50% LTV
Variable Rate Demand Obligations (VRDOs)
50% LTV

Please Note: Securities with no current, active market and no trading
history are not eligible for these loans. Medium-term notes (MTNs),
Standby Letters of Credit (SBLCs) are also not eligible for this
Call me if you have any reservations
Our securities loans are fast, secure and easy.  After we speak to you
and receive your account statement (held in strictest confidence (per
our Privacy Policy) we will review your portfolio carefully, whether
consisting of single or mixed securities, and promptly provide a term
sheet and quote for one of several stock loan or securities finance
structures. Then your new institutional account advisor will fine-
tune your loan quote until you have the financing you require.

You will need to own securities with a current market value of no less
than $300,000, which will be reflected on the account statement that
you send to us with your initial application. (Exceptions can be made
on a case-by-case basis for smaller portfolios).

Need a Fast Loan Approval? send a copy of you statement to us


1. What are the advantages of your securities-based line of credit?

We offer institutional security in an SIPC-insured account; a custom
lending structure with many more features than what is available at
any other U.S. banking or brokerage institution; a structure where
shares remain in your own account and title; a line of credit that
puts control of repayment in your hands; lowest interest in the
industry, starting at 3% for a variable rate line; and the highest
advance rate in the industry. instant cash for any investment or other
cash need – with interest-only terms, and no terminal point as long as
you maintain your securities collateral; and

You can get a direct institutional securities-based line of credit
from some institutions. However, normally the advance rate (loan
amount) is at or around 50% for stock equities while we offer up to
90% with all of the same security, reporting, and access that you’ve
come to expect from a major financial institution because your
securities credit line is managed by one of three major financial
institutions with which we work to implement this financing. That
means low-interest, lots of flexibility, but much more cash available
to you, when you need it. In fact, many of our clients obtain their
securities-based line of credit even when there’s no immediate need,
just to be able to have the cash ready without interrupting their
long-range investment objectives in the slightest, since their stocks
keep working for them as always and are not sold (thus no incurring
capital gains taxes as may be the case with other kinds of securities

2.  Please tell me about institutional stock loans and securities
lending vs private placement transfer-of-title stock loans and
securities lending.

When you give up title to your stocks, you are giving up legal
ownership of your assets in every way except through the lender’s
contract (what is sometimes called “beneficial ownership.)” This means
that the status of your relationship to your asset, in effect, boils
down to the contract alone.

The health of one’s lending institution is always important, but when
the contract is the core of your relationship to your assets, then the
financial health and stability of the lender becomes particularly
critical. The likelihood of your receiving your shares back upon
repayment is governed entirely by the abilities of the private
placement lender, rather than the rules or regulations or guarantees
provided through agencies such the SIPC. As a private loan
transaction, these are issues that need to be considered.

Extra assurance steps should always be undertaken with Transfer of
Title style loans.
A client should make an effort to obtain the assurances they need as
evidence of the private lender’s financial health. We suggest
third-party professionally audited and/or verified financials, updated
regularly, so you can ascertain lender’s ability to return your shares
when your loan is repaid.

We recommend the following minimum yardstick: Liquidity equal to no
less than ten times the amount needed to repurchase every share needed
on the open market for every share of every outstanding loan under
lender’s management. Further, this should be projected over the outer
limit of worst-case pricing scenarios over no less than six months, if
not longer. The resulting data should be verified by a fully licensed
CPA or attorney in good standing and in writing. Ensure that you or
your client has the right to speak to or otherwise verified the
CPA/attorney to verify further beforehand.

Unfortunately, few if any Transfer-of-Title lenders will provide this
level of asset-to-liability verification, much less to update it
regularly. Even though such due diligence is common and acceptable in
virtually any other financial venue — and increasingly demanded by
regulators in the wake of the recent mortgage crisis — many borrowers
continue to turn over title to their shares without any evidence to
support their lender’s financial health. The transfer-of-title lender
is in such cases is in effect asking you to “trust” them when they
refuse to provide verifiable proof of their ability to service their
loan portfolio.

In a typical transfer-of-title loan some or all of the shares are sold
to create the cash to fund the loan. The borrower will have given the
lender the right to do so by way of the loan contract. Often times the
lender’s right to do so is buried within the loan contract that the
borrower must sign to proceed, and some clients do not realize that
their shares will be sold outright to raise at last part of the funds
that constitute the loan.

If your transfer-of-title lender fully discloses that they may sell
all or part of the portfolio in the process of funding your loan, and
they do so clearly (not in small fine print) and third-party,
professionally verified and updated financial information is available
in writing, the loan may have the minimal level of security needed to

Note: The U.S. Internal Revenue Service may treat your Transfer of
Title loan as a sale at inception for tax purposes (consult with your
licensed tax professional to confirm actual status). Never accept
statements from any broker “guaranteeing” any aspect of your loan
without verification, such as no taxability.

Institutionally managed securities-based loan, by contrast (such as
those offered through our company) are structured on the same
principles as any common brokerage or banking loan, that is, with a
simple lien on the asset until the loan is repaid. Shares do not
change title except if the collateral is surrendered in the event of
an uncured default. Unlike transfer-of-title loans, there is no
“beneficial ownership”, only actual, outright ownership that remains
with the borrower. Rather than a private placement loan operating in a
relatively unregulated space, your loans are underwritten by a fully
regulated U.S. institution with the personal attention of licensed

There are conventional institutional loans – what we normally refer to
as margin loans – and there are structured loan programs. For
Securities Finance, our structured program is built as an enhanced
loan facility made possible through a private equity depository
relationship which enables financing with far better features than
those typically available through banks or brokerages. This means
higher loan-to-value, low rates, more customized structures, and a far
broader range of eligible securities.

With our institutional program the shares are not sold to fund the
loan in any manner. Instead, funding is direct and in cash via a
simple deposit to borrower’s account. That is not the case with
transfer-of-title loans, where some degree of share selling is
required to fund the loans, and a client may be told they will receive
their loan funds over several weeks as a portion of the shares are
sold into the market gradually.

The issue of due diligence with our loans has been in effect
“pre-completed” for you by state and federal. regulatory authorities
since the loans are managed, underwritten, guided, counseled, and
administered in full by a top-tier, fully regulated, SIPC-member
institution. That translates into royal treatment from a
brokerage/banking firm that has had to meet all required government
standards for asset security and licensure, standards perhaps now than
at any point in history. Your final loan contract is between you and
your licensed advisor; your records and reporting and access are
provided with the same professionalism you are used to with your
existing brokerage or bank.

Disclosure is never an issue with institutional securities loans.
These issues are governed by state and federal law, whereas private
placement lenders operate in a relatively unregulated space even

That also means the same client rights and lender accountability that
any client of any U.S. bank or brokerage has under the law. It means
public, open, easily available facts on your lending institution; no
obligations of any kind until and unless you arrange a loan contract
that you yourself choose to sign; and loan funds deposited directly
into your account with no complicated transfer issues or delays.

Transfer of Title to a private third party or retention of your shares
in a top-tier brokerage in your own account and title? Private
placement loan in an unregulated environment, or institutional loan in
a secure, fully licensed space? The choice will of course be entirely
yours to make but we counsel caution and good due diligence regardless
of choice.
you can get your loan in 4 days!
3.  But I need to pass credit checks and supply a long personal
financial statement and other paperwork, to obtain one of your loans,

No. Actually, quite the opposite is true. These are “No Doc” loans —
that is, your income and your assets do not determine either the
careerist of your loan offer or whether you will receive the loan at
all. If you have eligible securities, a custom loan term sheet will be
offered (often with great flexibility as well). Other than a “soft
credit check” – a check to make sure you aren’t currently in
bankruptcy proceedings — your loan is almost certain to be approved.

4.  Will we need a large portfolio of securities to participate in
this loan program? Do I need multiple securities in my portfolio?

No. Portfolio’s as small as $300,000 are eligible for these loan
facilities. The main consideration, particularly for smaller
securities portfolios, is that the stocks, bonds, mutual funds, etc.
in the portfolio are of sufficient price and trading volume – what you
might call – “quality” – to achieve loan eligibility for underwriting
purposes. Most marketable securities with a reasonable track record
will qualify under this standard for at least one quote. Diverse
portfolios of multiple quality securities will naturally get the best
quotes. For more on loan eligibility, please see our stock loan /
securities loan criteria page. (Keep in mind too that this loan
facility will also accept “securities-like” assets, such as Christies
and Lloyds-appraised professional certified artwork.)
this saves so much time!
5.  Are we held only to the loan quote(s) provided on their Term Sheet?

No. Your term sheet represents only your initial line of credit
securities loan offer, your minimum offer as it were and is designed
to be at the least a good yardstick by which to estimate your final
loan terms. You can avail of that offer, or request modifications in
discussions with your registered account advisor after we’ve received
your signed term sheet. Our goal is to get you to the place where you
can establish the exact securities financing you desire, either what
we have provided on the term sheet or a variant arranged through your
account advisor prior to final loan documents.

The progression, incidentally, is quite simple. One of our staff will
speak with you directly when you first inquire, and you will produce
evidence of your securities in the form of a copy of your account
statement. Once we have the information, we will analyze your
collateral in underwriting and we will then deliver your term sheet.

Your next step will be to sign your no-obligation term sheet to
signify your understanding of the basic line-of-credit terms as
offered, then either accept those terms or finalize your terms further
directly with your institutional advisor who will address your
questions, priorities, and objectives and to the extent possible, make
adjustments if necessary and allowable. The credit line loan documents
are then signed, a temporary lien is placed on your securities in your
account, and the funds are made available for withdrawal via wire,
checking account, or VISA/ATM.

6.  At what point do I begin to incur an obligation?

There is no obligation until you sign your credit line loan documents.
There is no obligation to apply for a quote or to obtain a term sheet
beforehand. Even after you have signed your term sheet and set up your
account, you are under no obligation to proceed with your loan if you
choose not to. In fact, even after signing – if you choose not to
withdraw your cash, you will not be charged interest. Again, once the
term sheet has been signed you will be taken directly into the correct
desk at your lending institution with a representative assigned to
assist you and process your loan. Your advisor will help you transfer
your collateral into your own new brokerage account in New York.

To repeat, until you sign your loan documents, you continue to have no
obligations of any kind. You simply have a brokerage account at a
top-tier, major U.S. institution, with standard SIPC-insured member
protections and the 24/7 online access that American investors are
accustomed to. The decision to proceed with your institutional
securities financing will always, and in every way, be entirely your
own, as with any other actions on your account or assets.

If the loan terms we’ve provided are acceptable to you, or you’ve
customized the terms with your advisor to suit your requirements more
precisely, your loan documents will be assembled and delivered to you
via your institution very quickly, though you will have as much time
as you need for review. Your obligation only begins with the signing
of your loan documents. The entire process is seamless and easy in
most cases.

Since this question deals with obligations, remember that you can exit
your loan at any time by simply paying off the remaining loan balance
(for our floating rate credit lines – most are – there is no
prepayment penalty; there may be, however, a prepayment penalty for
fixed rate quotes if this is what you require). Payoff of any
outstanding drawdown amount (your loan principal) can be direct with
cash, or by asking the lender to permit selling of enough shares to
cover the balance. Other exit and rollover options are also available
upon consultation with your advisor.

After retirement of the debt, as with any asset-secured loan, the lien
placed on your shares in your account is immediately lifted and you
will have full freedom thereafter to trade, sell, or transfer the
shares any way you choose.

7.  Are there any Capital Gains taxes?

No, there are no capital gains taxes with our custom line of credit
program. These programs leverage securities in your own account that
are not sold to fund the loan in any manner, in a credit-line type
financing structure. As a result, regardless of the value of your
securities, provided that you’ve complied with the terms of your loan
contract there can be no capital gains taxes while you work with your
loan funds for other investments.

Notwithstanding, we recommend that you always use the services of a
licensed tax professional for any tax-related matter or issue no
matter what it may be.

8.  Do you have an Affiliate program?

Yes, our Affiliate program is a conventional broker-advisor type
program.  This program is open only to individuals who:

(1) have a background in finance, securities, real estate,or a
relevant field with a clean legal background dating back no less then
four years; and

(2) preferably a live, actual transaction and

3) a verifiable, pre-existing sales channel or appropriate
pre-existing network of potential clients for our securities finance
services. Our ideal affiliate is an independent financial advisor who
works with a large number of high net-worth clients.

Please note that we cannot accept for affiliation individuals
seeking to develop brand new markets, sales channels, or networks for
our securities loan services when none currently exist. Networks,
outlets, or conduits must be pre-existing. We strongly encourage
established independent/registered investment advisors and other
related professionals to apply.  Please click here to learn more about
our Affiliate Program.

We will often place those who do not have live transactions (qualified
clients ready to apply for one of our loans) into the Affiliate Status
Pending category until they have an actual client to present to us, at
which time their affiliation application will be reviewed and the
affiliate admitted, provided they meet criteria 1 and 2 above. Note
that a lead tracking system (banners, etc) will be made available at
no charge for admitted affiliates on request.

Only those who are actual signed affiliates may market our loan
products (beyond the approved internet banner program noted above). We
do allow our approved one-page Introduction to be distributed direct
from us to your client, however, regardless of affiliation status, and
we will be happy to call and discuss our programs with your clients.

Conventional full-agent affiliates may also participate and use the
internet-banner type affiliation program.

9.  Can you give me the names of the institutional lending
institutions before I sign my term sheet?10

Unfortunately, no by agreement with our lenders. This is an enhanced
loan facility made possible by special relationships we have carefully
cultivated with fully regulated U.S. financial institutions through
our partner firms. We are not employees of the institutions, and the
loan services we offer are not available at these institutions in this
form or with these features except through our loan facility. So
certain protocols must be observed in marketing the lending facility
to the general public, and that is why we screen our applicants with
care. Though most of our clients will be eligible for our services, we
are required to operate in this manner.

However, you will receive full disclosure of not only the name of your
lending institution but all be taken right into a conference call and
invited to meet with your licensed account representative as soon as
we have your Term Sheet in hand.

Keep in mind there are no up-front fees, no application fees, and no
obligation at any time prior to signing your loan documents, so there
is no risk in waiting for institutional disclosure until after you
have applied in this way. We can assure you, however, that your lender
will be one of the biggest and best in the financial industry.

Note please that this policy is also an administrative measure to
ensure that our lenders are not overwhelmed with ineligible or (or
unfortunately, even fraudulent) loan requests. We are expected to do
our utmost to ensure that this credit line program is administered in
a professional manner, and we take that commitment seriously.

10.  Can’t I get these loans on my own, for example, by walking over
to my broker or bank and asking for the same terms or structures?

No, you cannot. These are custom structured financing facilities
carefully designed to make use of support across more than one
institution to create a level of flexibility and value that exceed the
institution’s own private banking or private placement services. As
custom, not standard services they are unique in that these features
are not often present in the same package.

Put another way, we provide an accessible loan facility for
individuals that is superior to that which you can obtain on your own
at any financial institution in the country, and a plug-and-play
lending facility that is for the most part impractical if not
impossible for professional institutions to create on their own.

11.  What if I want to swap out my current collateral with other
eligible securities, even though I don’t want to formally exit the
loan yet?

This is possible with this securities-based line-of-credit facility.
One of the many flexible features of these loan programs is that with
lender’s permission you can swap out the current set of collateral
securities for a replacement set of approximately equal quality and
value, allowing the potential to unfreeze and regain your original
shares mid-loan if you should need them for other purposes. Your
lending institution is happy to work with you should this scenario

12. Are any other types of collateral acceptable for your program?

Virtually any marketable security is eligible for consideration, from
municipal bonds to T-bills, to U.K. stocks to mutual funds.(Please see
the above Loan Criteria section for details). As of of March 1, 2010
this institutional loan facility can now be used with verified and
certified works of art provided they have been officially certified
and valuated by Christies. Please contact us for more information on
the collateralization of artwork.

13. How soon can I expect to see my loan funds?

Within 48 hours of signed credit line documents is standard. We
measure receipt of loan funds by gauging the time from which the loan
documents are signed. If the collateral and your new account have been
set up (same day may be possible in some cases) and you have read and
approved the terms of your loan offer, you will sign the loan
documents in as few as 24 hours. From that point until funding –
typically the wiring of most or all of the credit line – is 48 hours
for processing.

14.  Suppose I have an immediate problem or question. Who do I contact?

One of our staff will always be available to speak with you for any
issues prior to the signing of your term sheet. We are also available
24/7 to support you as needed post-loan, as you will our direct number
and your account manager’s direct number.

15.  Do I get regular account statements?

Yes, always. Like any bank or brokerage, you get regular monthly or in
some cases quarterly account statements direct from your institution.
You can also print these out via your online access, which is
available 24 hours a day, 7 days a week. The traditional statements
will show the status of your loan and the position of your collateral
securities among other data in your reports.
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