Clients on the hunt for alternative capital raising vehicles are increasingly turning to Equities First and equity loans. Equity loans, oftentimes referred to as stock loans, are good ways to raise non-purpose capital. These loans are secured by a group of stocks, held as collateral, and they also act as a hedge for this group of underlying assets in the event of a decline in their value. Equities First Holdings (EFH) has been in business since 2002 and has lent over $1.4 billion dollars in this time period. The number of transactions associated with the $1.4 billion is 650.
Equity loans are structured with a fixed interest rate over the life of the loan and are typically set between three and four percentage points. As the loans are structured with the pledged collateral, there is no worry of margin calls, and the loans are always non-recourse. These loans are quite well-suited for potential borrowers that are looking to raise non-purpose capital in a quick time period or that shy away from bank-originated loans with their overwhelming amount of paperwork requirements. As banks tighten their lending requirements it often becomes less advantageous for those with less than perfect credit profiles to borrow at what are usually higher interest rates.
High net worth individuals are also drawn to equity loans due to its non-recourse structure and quick turn around times. Non-purpose capital cannot be used to carry, purchase, or trade securities but there are not very many other regulations associated with this type of capital. Equities First is proud to partner with its clients and to help them to gain access to alternative vehicles in their non-purpose capital raising. As today’s banking environment grows even more difficult due to heightened lending requirements, alternative capital raising vehicles are coming to the fore today.