Answers to Common Questions.

(Last updated April 3, 2009. Please use our contact form for any and all questions.)

[ Can you explain in a simple way how your new Premier HedgeLoan works? ]

Our new Premier HedgeLoan works as follows. Your stocks remain in your name and title in your new account at the well-known, top-rated US brokerage with which we've partnered (all detailed information about the brokerage will be provided to qualified applicants when we speak to them). This is precisely the same as with any brokerage account anywhere, with all of the same rights and privileges of any licensed U.S. brokerage account that you would expect. Your loan documents are provided to you by that brokerage (as are you account statements later), and you agree to a common lien on your securities until the loan is paid off.

Lender cash is provided to you by direct deposit into your own checking account at the banking arm of that brokerage, available thereafter at any of the bank/brokerages office anywhere in the world, online, and via phone. There is absolutely no trading, selling, manipulation, altering, or modification of your shares in any manner other than the simple lien to guarantee the loan.

All of the common benefits and features of any licensed brokerage apply, including standard government SIPC guarantees. Payoff is simple and exactly like any other collateralized loan: If you pay off you loan, the lien is removed immediately and the shares are available in a matter of hours to trade, move, sell, or do anything else you want to do with them. For payoff, you can always ask lender to sell enough shares to retire the debt, leaving the remainder to you. Or you can roll it over to a new loan, possibly with even better terms if the securities have performed well in the interim. In every case, all of the upside value of your portfolio of course is 100% yours at all times.

If you cannot repay the loan, your liability is limited to the securities themselves and nothing else -- the definition of "nonrecourse." You shares can fall to virtually nothing and there will be no margin calls by lender to shore up the collateral with more securities or cash, regardless of how low in value the collateral portfolio may have fallen. Surrendering the shares is complete fulfillment of repayment, and there is no reporting to credit bureaus of any kind.

These loans are available for amounts as low as $100,000, with an loan-to-value of 95% (for federal securities such as Treasury bills.) The program accepts mutual funds, corporate bonds, municipal bonds, and of course stocks as well. With interest rates starting at 4%, this loan program is HedgeLender's showcase program and represents superior in security and features unavailable in any other loan facility currently available.

Collateral we do not accept: Medium Term Notes (MTN's); Standby Letters of Credit; and Bank Guarantees from any source. We do not accept securities collateralized by mortgages at this time.

[ How do your other, "Classic" HedgeLoans (Flex, Flag, Cap, and Freedom) work? ]

One way to illustrate might be to use an analogy to a very common type of asset-secured loan, for example, an auto loan or a house mortgage. In many states to purchase an automobile with a loan company or bank's cash you would go into a car dealership, pick out your car, and sign for your loan if the dealer or your bank financed it. You would then drive home with the car and it would be yours to use as you please. For all intents and purposes, it is indeed "your car." We can in essence say that you are the "beneficial owner" of your car, because your loan company holds the actual legal ownership - the title document in this case - until you pay off the loan.

Now, your bank really doesn't want to own the car. It makes its profit form the cash from repayment, plus interest, like any loan company, and HedgeLoans are no different. Your interest payments, whether quarterly, monthly, semiannually, or accrued to the end, are how the lender makes his "sure income" from it all just as with any loan anywhere.

But stocks, of course, are not cars, mortgages, or home entertainment systems. Their value could change in minutes - witness the recent decline in prices at General Motors or when Lehman Brothers financial woes become public. A house is a house as long it's standing; A car is a car as long as it runs. A share of stock, however, can be unreasonably high or unreasonably low or very accurately high or low. It can also become worthless overnight or blast off to unthinkable heights with one license or new product. Indeed, these great swings can occur in a matter of minutes.

[ So with your Classic HedgeLoans, you "calm down" the collateral - fix the range at which you can sell it if the borrower defaults - so it can be rendered usable for loan purposes? ]

Basically yes. HedgeLoan funds managers undertake various hedging strategies to "hedge our bets" against potential loss while remaining cognizant of the overall health of their individual funding models. Risk free? Of course not. Low-risk? Yes. Each of our programs use options-based risk-reduction strategies to some extent. Usually these are in tandem with fund-based strategies where shares and cash can be moved in and out (except for the Premier program, where nothing moves). The goal in either case is to ensure that the lender's potential for loss remains within a predictable and acceptable range -- in other words, a range of possible loss the model can tolerate while remaining healthy.

You may also look at it this way: Everything boils down to the quality of the stocks going in. This is why we are so concerned about pricing and volatility when we provide your loan quote. Stock history is in this way part of the lender risk-tolerance calculation. In the same way, the health of all the stocks from all borrower collateral is another element. Sophisticated forecasting models are used to test each prospective client's collateral stocks not only to determine eligibility but also to define the types of loans and terms that we can offer.

Once the variable stock asset has been relatively 'fixed' in this way, the loan can proceed as a nonrecourse/limited recourse stock loan and the many flexible benefits of this type of stock liquidity can be passed on to our borrowers.

[ Does your company have anything to do with hedge funds or any of the problems on Wall Street recently? ]

Absolutely not. The "hedge" in our name is the dictionary definition of "hedge", the same one you use when you say "I hedged my bets today by bringing an umbrella in case it rains." HedgeLender is a professional lending organization with no relationship, involvement, interest, or participation in any form of hedge fund and we have never been so.

Our securities loans are unrelated to any actions, products, or activities you may have read about in the news involving stock loans, short-selling or stock finders. These are a completely different type of service than what we provide. We specialize only in custom portfolio-secured nonrecourse loan facilities to securities owners, and we do so with a personal touch and level of efficiency that is the true envy of much larger, traditional organizations.

[ What about the use of loan proceeds? ]

You can use the loan proceeds for any legal purpose (other than the repurchase of marginable securities such as stocks).

[ What is the eligibility criteria for HedgeLoan stocks? ]

Download our Product Comparison chart for a quick and easy way to compare all of our products and services. This should answer most of your questions quickly.

For our Premier HedgeLoan, the criteria is simple: Any security other than MTNs, bank guarantees, or letters of credit provided that they have an active market. (Note please that for the time being, Premier cannot accept securities backed by mortgages). The value of the portfolio at inception should be at least $100,000.

For our Classic HedgeLoans (Flag, Cap, Flex, and Freedom), a rule of thumb is used that states that if the price of the security has held steady or increased over the prior four weeks, and volume has been strong, then there is likely to be a HedgeLoan available for the portfolio. Another easy way: Multiply average volume as reported on any of the stock or data site (e.g., Yahoo Finance) times latest bid price. If the number is $50,000 or more, we'll have a loan quote for you. Inquire directly for a response specific to your case.

Stocks that have several zero trading days over the past 4-8 weeks or huge swings in price or volume over a relatively short period of time may find fewer offers - or none - than stocks with low trading volatility.

We accept portfolios as small as $50,000, with upward limit defined only by regulation (i.e., DRIP rule for insider transactions) and stock performance.

We accept for review restricted stocks provided that they are nearing the end of the restriction period, but will not offer loans against them for regulatory and legal reasons until the restriction has come off. Our policy is that a restriction exists for a reason, and we intend to honor the spirit of that designation.

[ Must I transfer the stocks to the U. S.-based lender's sole custody? ]

No, not with our Premier HedgeLoan. Quite the opposite in fact. You keep them in your own name, title, and account. You receive the brokerage statements and any rise in value in the portfolio direct from your U.S. brokerage account. All of this has been made possible by mobilizing our relationship with a respected NY equity fund partner that has leveraged their pre-existing relationship with one of the best-managed securities firms in the United States to spring a loan with features never before seen in any securities finance product.

For our Classic HedgeLoans, yes, you must transfer them through a licensed transfer agent to lender's U.S. custody and you remain the contractual, or "beneficial" owner of the portfolio until the loan is paid off (or you default or renew). We can best illustrate this by returning to the analogy: When you purchase an automobile on credit, a bank lends you money for the automobile, and you make payments on it until it is paid off. While it is being paid off, you retain all of the benefits that come with ownership of the car -- you enjoy its use, even make certain modifications to it if you like because it is in effect "yours". However, during this time the title to the collateral - (in effect, the actual collateral) - remains in the hands of the bank, for that is the only security they have to ensure you won't disappear and never make another payment on the loan they extended. They thus hold your "car"as it were until you have paid their loan off, and when that day comes, the "car" (title) is released from the bank and returned to you.

This principle applies to all of our Classic HedgeLoans. Your stock collateral remains in our custody while you enjoy the use of the cash loan proceeds. You'll probably make quarterly interest payments. When you pay off the loan, you regain "title" to all of your shares.

Unlike a car loan, however, which is a "recourse" loan, our HedgeLoan is a nonrecourse loan, making it far more flexible than a conventional loan where, if you default, the lender can seek repayment from your other assets including bank accounts, land, etc. HedgeLoan thus goes conventional loans one better: You keep the loan proceeds and owe us nothing more by surrendering your shares, even if they're worth far less than when you started. You can do so, and we can offer this privilege, because we've hedged our bets already.

[ What kind of credit score do I need to qualify for a HedgeLoan?

None. None of our programs require tax returns, FICO scores, appraisals, net-worth statements, or credit checks to determine eligibility (for Premier, compliance rules may require that a personal financial statement and related documents be kept in confidence, on file, at your brokerage, but these are not used to determine loan eligibility.) Anti-money-laundering background and identity confirmation checks (in compliance with US law) and your eligible stocks are all that are required for our loan programs. Credit simply is not involved. We do not use credit scoring nor report defaults to credit bureaus. The type and quantity of your stock or other securities is the only criteria we use to determine loan eligibility. (Please note that in compliance with Patriot Act and Homeland Security requirements, foreign applicants will be required to deliver a copy of their passport and may be asked for other identification confirmation documents prior to proceeding).

[ What types of HedgeLoans do you offer? ]

We currently offer one premium nonrecourse securities loan (Premier) as our feature loan program with absolute and total security and all of the great HedgeLoan features our clients have come to expect. We also offer our four "Classic" HedgeLoan programs - Flag, Cap, Flex, and Freedom. Please always feel free to ask us about any of them.

1) Premier HedgeLoan: The most secure and feature-rich stock secured loan program in the the financial industry today. Absolutely no sale or modification of the client's shares in any manner, shape or form, early payoff with no penalty, SIPC insured. Read our Fact Sheet here.

2) Freedom HedgeLoan: Good range of stock eligibility. LTV 40%-80%. Pay off your HedgeLoan early with nominal penalty. Avail of up to 80% (occasionally higher) loan-to-value in a limited recourse package. Interest-only loan with payments due quarterly and quarterly review for higher loan amounts if stock price has moved upwards. Dividends paid directly to borrower when earned and shares voted per client's instructions. Callable and noncallable versions available. Read Fact Sheet here for more details, or Contact us.

3) Flex HedgeLoan: Ideal for strong stocks seeking lower interest rates particularly. LTV 35-75%. High growth-per-year upside cap, (e.g., 3 year loan, all appreciation of stock up to 300% of initial value to account of borrower, excess only after cap has been met to lender). Interest-only paid quarterly. All dividends credited, regardless of amount, against interest. Terms to five years maximum. Recourse limited to stocks only in case of default, not reported to credit bureaus: As with most HedgeLoans, forfeiting collateral shares (converting loan to a full sale to lender) constitutes 100% fulfillment of loan regardless of price. Callable at very generous (and rare) 50%-60% price drop only. Read Fact Sheet here. Contact us for questions

4) Flag HedgeLoan: Available for standard range of free-trading stocks with price of no less than $3/share and price X average volume of at least 80,000. Up to 85% and in some cases 90% LTV limited recourse loan. 100% hedged primarily with investment-grade, U.S., private options. Licensed RIA account manager. Non-callable, interest may accrue to maturity or be paid quarterly. U.S., Japan, UK, and Israel foreign exchanges welcome. Read Fact Sheet here. Contact us for questions.

5) Cap HedgeLoan: Identical to our Flag HedgeLoan, with capped upside at 10-30% per year. Available to a somewhat larger range of stocks including some pink sheets. No margin calls, limited recourse, options hedged. Read Fact Sheet here. Contact us for questions.

Each family or category contains many variants which can result in hundreds of potential loan structures within each family and multiple lender participation.

[ Do you accept restricted stocks that can be sold under Rule 144? ]

We will review restricted stock loan shares if the restriction is due to be lifted within a reasonable time frame. We do not accept restricted stock into our loan programs at the present time, however. Loans will not be underwritten until the restricted period has elapsed, but it can be otherwise prepared. Inquire for more information.

[ Do my stocks have to be in electronic (DTC) format? ]

None of the programs used by our lenders allows for a hedging strategy, regardless of what method is used to hedge, unless and until it is in electronic ("DTC") format, the common and usual format that all securities firms in the U.S. use. (Note that there is no real "transfer" in the case of Premier HedgeLoan, since your stocks remain in your own brokerage account). Stock certificates are accepted, but they will always need to be converted to electronic format by your brokerage or a registered U.S. transfer house which can add as many as two weeks to the funding timeline. In most cases, with your permission, we can help facilitate communication and administration to ensure that all details are attended to during certificate transfer. If you would like us to do so, simply check the appropriate box on your Term Sheet when we deliver it to you. Conversion into electronic format is normally a simple process that is best handled by the client, however, even though we will assist to the extent we are able and you authorize us to do so.

[How long until borrower receives his loan cash?]

Very quickly. With Premier, typically within 24 hours of signing the loan documents. For the four Classic HedgeLoan programs, within a 3-5 business days. With the Classic loans, speed depends on primarily on how fast you as share owner can get the collateral to move, how quickly the shares can be transferred from the borrower's accounts to lender's custody for hedging. Typically, a client receives his loan within 3 business days on average if everything is moving along smoothly

For Classic loans, if volume of trading is good, funding will be immediate. But if you have a large transaction with poor trading volume or high volatility, Flag, Cap, and Freedom HedgeLoans will fund on a weekly disbursement schedule roughly approximating 2-3 times the average four-week volume of trading on each stock. A stock averaging 100,000 per day will be processed at the rate of between 200,000 and 300,000 shares per week, for example. Flex loans vary by quality of stock but typically are fully funded within 1-2 weeks in one lump sum even if the stocks are trading at a very low rate. Inquire for specific funding estimates: Most deals with strong volume will fund within a week of receipt of shares.

[ What happens to my stock's dividends while you hold the shares? ]

With the Premier HedgeLoan and Freedom HedgeLoan, your dividends are paid directly to you or they may be credited against your interest due, whichever choice you prefer. With our other Classic HedgeLoan programs, your dividends are credited against your interest owed.

For larger transactions (over $2MM in value), Flag/Cap HedgeLoan may be constructed to pay dividends directly to the borrower, provided that interest is paid quarterly.

[ How will my shares be voted? ]

In the case of Premier HedgeLoan, you vote them directly. For Classic HedgeLoans, shares are voted "with management", the default election on most proxy statements.

[ What is the role of interest in a HedgeLoan structure? ]

For Premier, they act as any interest does; profit to the lender, the cost of the loan. For our classic HedgeLoan, interest payments serve different roles in different products, but they do not normally only constitute profit.

For Freedom, Flag, and Cap HedgeLoans, interest payments are part of the overall structural mix that allows a collateral asset of variable worth to be converted to what amounts to a fixed asset so that funds can be lent against that asset without significant risk to the lender. In other words interest can therefore can be thought of as a means to ensure that all shares we hold are securely hedged for the borrower, while making good economic sense to the lender as well.

Remember a "hedge" does not necessarily mean an options-style or hedge fund style "hedge". A hedge is a counterbalancing action to offset a risk. All hedges are conducted within the permissions granted by the borrower within the loan contract.

[ Are there any hidden costs or fees? ]

No. There are no hidden fees. HedgeLender is well-known in the financial and securities industries for being plain spoken, approachable, and ready to serve our clients, and our definition of "service" puts transparency and fair fees at the heart of what we do. If problems or questions arise, our clients get full personal attention; we urge our clients to contact us immediately if they feel there is anything amiss so that we can make sure all issues have been resolved to the satisfaction of the borrower. We do receive referral fees and/or origination points if we have done our job and produced the financing you requested. Typical origination fees on HedgeLoans are 5% of the gross loan amount.

Quotes are always free, and we do not receive a penny unless the loan itself closes to your satisfaction.

We are an A+ Rated (Better Business Bureau) company and believe firmly in full disclosure. HedgeLender absolutely does not accept up-front consulting or "commitment" fees nor do we authorize any of our agents to accept them. We go over all of our documents to make sure they are clearly written with no "small type." One flat fee deducted from loan proceeds and no more is our standard.

[ I am a foreign resident. What about the Patriot Act and HedgeLoan? ]

Premier HedgeLoan is not yet available for foreign exchange securities, though we expect it will be by May of 2009. Our classic HedgeLoans are now available in many foreign locales. HedgeLender is happy to offer a flexible, secure loan product to our foreign clients holding stock in the many exchanges where we operate if eligible, however foreign clients must be willing to produce a legible photocopy of the front and back covers of their passport and a signed statement that the proceeds. We do also require thorough criminal background checks and ID checks to confirm client identities in conformity with the law.

[ Is HedgeLoan available to corporate affiliates? ]

Yes. Affiliates or "insiders" (directors, CEO's, owners of 10% or more of outstanding shares) will typically have what are called DRIP (or "dribble rule") regulation limits on the total number of shares they can place into HedgeLoan financing in a given 90-day period, just as with any sale (although HedgeLoans are not structured in our loan contracts as sales, but as loans). This number is set at the greater of either the prior average four week trading volume total, or one percent of the total outstanding shares. This rule is also in effect because your HedgeLoan exit allows you to instruct us to sell your shares to pay off your loan principle and any interest, if you desire, at maturity. Proper reporting by client is required and expected.

[ How can I be sure my stocks will be returned upon repayment? ]

With Premier, your stocks are under you control at all times, never sold, traded, shorted or anything else. They are always accessible online as with any normal brokerage. When you repay (or roll over) the loan, the lien is simply removed and you can once again trade or sell them the same business day.

For our Classic HedgeLoans, we point to our track record and our reputation, and the strong professional management behind each program. Security and compliance are the basic building blocks of our company: HedgeLender's HedgeLoan® label is in essence a form of what we call "certification" that says that to the best of our information and belief, your hedged portfolio funding structure meets the highest standards for security, compliance, liquidity, and personal service in the industry, and that the history of that structure bears this out. In practical terms, your loan contract will be executed as agreed and there is no danger in your securities not being returned, in full and in compliance with your loan contract, on time, upon repayment.

[ Can I prepay my HedgeLoan? ]

With our Premier HedgeLoan, you can prepay any time - even the day after closing! with no penalty whatsoever. With Freedom HedgeLoan, you can prepay any time after the third month with interest penalty equal to remaining first year interest. Our other Classic HedgeLoans are fixed-term loans where the loan term matches the option term that has been purchased, and we ask our borrowers to pick their term with care. Please note that if you have a particular prepay scenario in mind with our classic loans, you can bring that to our attention during the initial phone conference, and we will make an effort to accommodate.

Please also note that Flag and Capped HedgeLoans can in some cases be arranged to allow repayment during annual repayment "windows" annually with a nominal penalty.

Every HedgeLoan can be renewed. Each one has its own particulars, but as a rule, there is a small nominal renewal fee at time of renewal when new loan documents are issued. Contact us for specifics that can apply to your portfolio and loan program.

[ Do I get regular account statements? ]

Yes. For Premium HedgeLoan, these will come directly from your brokerage as with any brokerage account, every quarter. For our Classic programs, they will come from us. Depending on the program you choose, a monthly or quarterly invoice-style statement or regular account statement will be issued, typically covering total share value, interest accrued, and net profit or loss (if any) if the loan were to be repaid on that date. Other useful information is included from time to time depending on the loan program.

[ What are my exit options at loan maturity? ]

You can always prepay your Premium HedgeLoan with no penalty.

For every program, including Premier, you may renew your HedgeLoan; or you may pay if off out-of- pocket with your own cash; or ask us to sell sufficient shares to pay off the loan and remit any profit back to you as share owner/borrower up to any caps your loan may have; or walk away entirely from the loan and owe us nothing but the shares, regardless of value, with no negative effect on credit record - what is called the nonrecourse loan provision.

[ Who do I contact if I have questions during the loan term? ]

You will receive a phone number, toll-free, or you may use our email Contact form.

[ Is the transfer of my shares to lender safe? ]

Absolutely. There really is no "transfer" with our Premier HedgeLoan in any case -- you are moving your own shares into your own account at the top national brokerage we work with, on your own.

But with our classic programs, transfers occur via secure, nationally and internationally accepted transfer using the DTC system - the safest and most common system in the U.S. securities industry. Stocks reside in these transfer accounts to await the hedging process, or are moved directly into the lender's U.S. safekeeping account for the duration of the loan term, depending on the loan program chosen. Confirmations of every step of the transfer process, by phone and e-mail, are provided upon request to every client.

DTC transfer is in sum a common stock transfer method used by banks and brokerages throughout the U.S. and many foreign countries, with an excellent record for security and transparency. For more information on the DTC system, please click here.

[ Does the lender have the right to sell my stocks? ]

With Premier HedgeLoan, no. They are yours.

With our Classic programs, the lender's rights are spelled out in the loan documents that will be delivered to you upon receipt of your loan application. Each program includes language allowing the lender a variety of rights necessary to hedge lender's risk of loss in the event you default on your loan repayment; selling or trading to some extent may be a part of these rights. When provided and in the hands of a good manager, they allow sufficient risk reduction to permit a loan facility to be offered to the client for securities that otherwise could not qualify for a loan. Borrowers should always read over their loan contracts thoroughly and should never undertake a securities finance transaction without understanding the terms and conditions of that contract.

[ Is there any way to lower my interest rates? ]

Yes. Many in fact! Your goals, your loan term, the track record of your stocks, the size of your holdings, and the type of loan you choose will all have a bearing on interest rate and many of these you can control. Portfolios over $2 million in initial value, for example, can typically be assured of the very best terms and rates, but these can also be available to smaller portfolios and quality securities of all types if their volatility rating is low.

Keep in mind that Premier HedgeLoan provides rates from 4% and most loans fall between 4% and 6%, making them less expensive than most conventional financing all the same.

If you have more specific questions, or want to get started on your HedgeLoan quote now, please just fill out our Contact Form HERE and a representative will call you today.