Equities First Holding has been helping businesses find the capital they need to operate since 2002. This company has offices in nine countries. They often help business executives find capital when more conventional lenders have not caught the company’s vision yet. In doing so, they have completed more than 650 stock transactions worth over $1.4 billion dollars.
Al Christy Junior, CEO of Equities First Holding said recently that businesses need to consider three types of loans, according to an article recently published on Market Wired. First, companies can consider a conventional loan from a traditional lender. These loans often carry tight loan qualifications meaning that some companies will not qualify. They also often have a high-interest rate making the payoff terms unreasonable. A bank loan must be paid back regardless of circumstances.
Christy also says that businesses may want to consider a margin-based loan. With these loans, executives put up a share of stock in exchange for the loan. Usually, these loans have a 10 to 50 percent loan-to-value ratio. The lender may demand that the money be spent for a particular purpose. The lender reserves the right to liquidate the stock if a margin call occurs. Executives have the right to walk away from these loans.
For many people, however, a stock-based loan is a better choice, according to Christy. These loans have a loan-to-value ratio of between 50 and 75 percent. There is no restrictions on how the money is spent. Borrowers can walk away from these loans. The lender cannot participate in margin calls using the stock.
Christy says that a stock-based loan is a great choice for many businesses because of its flexibility.
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