Powerful Institution-Managed Lending

We facilitate institutionally managed securities-backed loan services where the borrower's shares remain in their own title and account at a major SIPC-member brokerage firm for the duration of the loan. Shares are never sold to fund these loans.

A hedged portfolio version of this institutional securities loan is available. A limited recourse, feature-rich loan is made possible when an eligible portfolio with optionable securities is available for use as collateral, and an option is purchased and structured into the loan to help reduce lender risk of loss in the event of default (and borrower liability).

Key Features
With this loan program the collateral securities are not sold to fund the loan. Rather, they remain in borrower's title (name), and account as with any common brokerage or bank account. The loans utilize only top-tier U.S.-brokerage firm management and the overall structure benefits from the support of an equity fund, which leverages its relationship to spring a credit facility to enhance the LTV and other features of the loan.

The end result is a very competitive, interest-only, full-upside loan facility with above-average LTV (see chart at right). Collateral receives a simple lien to secure the loan, which is lifted upon repayment. Other features are fast closing, with minimal paperwork. Credit not a factor in determining loan offer, though every borrower must have sufficient assets to service their loan.

Prepayment is at any time, and there is no penalty for retiring the date early. Voting rights remain with borrower while shares secure loan. One set of securities may be swapped for another even while they act as collateral (requires lender's consent). Additional loan cash possible if portfolio rises in value during the loan term, again with lender's consent.

Underwriting Requirements
Accepted: Publicly traded stocks, municipal/state/federal securities, exchange-traded funds, and all forms of mutual funds. See the table at right for full list. $120K minimum portfolio size. Foreign shares accepted with sufficient volume and price history. Best LTV for portfolio's over $2M in initial value. CMO's and other mortgage-based securities acceptable (Ginnie/Fannie Mae) or others if bundled with other securities. Optionable securities of all types get best terms.

Average Daily Volume
Healthy market for the securities; a strong volume of trading over time.

No Red Tape
Less paperwork than most loan programs, e.g., no FICO scores. Focus is on quality of collateral rather than credit. Must demonstrate assets sufficient to service your loan.

Features / Benefits:

Institutional Security
Never sold to fund loan; shares/securities remain in borrower's own account at all times. Management exclusively through well-known, top-tier U.S. national brokerage/banking institutions. SIPC-member benefits and coverage identical to any standard licensed U.S. brokerage account. For the hedged portfolio variant, the option hedge is purchased by institution at borrower's direction and structured into the loan for additional protection in the event of default.

Interest Rates
Interest rates based between 3-7%, fixed and floating rates available. (At time of last update, the typical loan through this program had a floating rate at approximately. 4.35%).

Maximum Loan-to-Value
Up to 95% of current market value of the securities pledged. Best LTV's for optionable shares. (See table at right).

Non-Callable Feature Standard
Non-callable regardless of drops in share prices, making them a fully "no-margin-call" loan. Note: A callable variant is also available that may permit higher LTV in some cases in exchange. Inquire for more information and quote.

Available to Advisors, Institutions Too
We've added our knowledge of client requirements to the resources of a large equity fund and the expertise of leading U.S. bank/brokerages to create a form of lending possible for a wide range of securities owners. Existing financial services move this securities loan direct from the lending institution into their current services to enhance their clients' choices.

Payoff Anytime, Without Penalty
Pay off your loan if you decide you want to unfreeze the stocks or other securities for your own use. If prices go up and your stocks are worth a lot more, for example, you may seek to unfreeze and sell them. With a stock-secured or securities-backed loan using this program, you can do so. You can pay the loan off with cash directly, or ask lender to sell enough shares to pay off the remainder of the loan. Inquire for details. Liens are removed promptly upon repayment and full control returned to you.

Fast Funding
Delivery of loan cash within 72 hours of signing loan documents is normal, though actual time may be slightly less or slightly more depending on the particulars of each client and transaction. Funds are deposited directly into borrower's checking account.

No Up-front Costs
Our fees are deducted from loan proceeds, so there are no true out-of-pocket costs until your first quarterly interest payment is due after three months. No advance processing fees or other application fees.

Sample Maximum Premier Loan-to-Values (LTV's):
Note: LTV's are not guaranteed, but rather represent the maximums for each category. As a rule, better quality securities and larger portfolios will be able to avail of the best rates too.

A Limited Recourse Loan In Default
With the hedged portfolio variants of this program, if you should find that you have no choice but to default, you can normally do so with less fear of attachment of any other assets (e.g., a lien on your house or other bank account) or any negative effect on your credit rating.) If the option has been structured into your loan properly, default will usually mean that surrendering your shares and exercising the option will fulfill your loan obligation, no matter how low the value of the stock portfolio at the time of default. In this case, there will be no claim on any of your other assets in default. This is not guaranteed, of course; risk is never completely eliminated just as it is never completely absent from any securities transaction. But it can mitigate lender risk of loss through the surrender of the shares and the exercise of the option, and in practice does so completely.

An "Equity Line of Credit" Feature Standard
Not enough control? These loans feature a line-of-credit style provision that will allow you to modify your loan mid-stream to take more loan cash out if the portfolio has risen consistently. This is available when and if your shares have moved up in value and retained that status. (Please note that additional loan cash credit is not automatic, but is rather at lender's discretion and a review of all factors. Eligible portfolios should maintain a higher value over a reasonable period of time prior to consideration).

All the Growth in Portfolio to the Borrower
No asterisks, no fine print. Every last penny of value in your securities portfolio belongs to you in our standard model loan. There is no lender participation or claim to any of the upside growth in your stocks if they appreciate in value over time. (Note: "lender participation" variant of Premier is also available for those who may seek a higher loan-to-value in some cases. Please inquire for more information.)

Dividends to Interest, or Dividends to You?
They're your securities and it's your loan. You decide. Your dividends can go to you, or you can ask to have them credited against the interest owed on the loan.

Regular Account Statements
You'll get monthly/quarterly brokerage/bank statements just like you do now, all direct from the SIPC-member brokerage institution managing your portfolio.

Multiple Exit Choices
Ask lender to sell enough of the stock to pay off the loan. Or modify the loan while getting cash out under the line-of-credit provision. Or pay off the principal out-of-pocket with your own cash in the normal loan payoff fashion. If you cannot handle the interest payments for any reason and must declare default, you can exercise your limited-recourse exit rights with fulfillment of loan obligation through the exercise of the option and no negative credit reporting upon surrender of collateral. You can also consider a simple rollover ‒ renewing your loan on the same or better terms. Or create a custom exit with the licensed financial advisor from your managing institution who will consult with you to develop your final loan agreement. Again, the choice is yours with HedgeLender LLC securities finance.

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