Benefits of a Non-Recourse Stock Loan from a Private Stock Loan Lender

Liquidity is a major reason executives, insiders, and ultra-high net worth individuals consider non-recourse stock loans in meeting their fast cash and liquidity needs. Let’s take a look at some of the other advantages this type of financing offers.

1. Borrower not personally liable for the loan.

2. Privacy and non-disclosure, you may not be required to disclose to others, for privacy many borrowers prefer this feature.

3. Opportunity for a clean balance sheet that leaves room for other refinancing and acquisition opportunities that can make you more attractive to other lenders.

4. You can walk away from the loan, the day after the loan is funded and not be liable for any future interest payments or principal payments with a non-recourse loan.

5. In the case of default, the lender can only seize the collateral pledged for the loan and cannot go after any of your other personal assets. You are safer with a non-recourse loan and have more options and security than a recourse bank loan or a margin loan.

6. You do not have to disclose liability on financials, to partners, or other financial lenders due to the fact that you are not obligated to pay back the loan. This major benefit is why you may want to structure this for privacy, so it does not impact your personal financial statement.

7. Better product than a bank, minimal paperwork and fast closings – Private lenders can move quickly, no red tape and offer a streamlined stock loan process. No need for financials, no credit checks, or business plans written out.

8. Personal credit, tax returns, etc. not required – no tax returns from multiple years like traditional banks require, which is a far more complicated process.

9. You reap 100% of the rewards of any appreciation or dividends

10. No recourse against the borrower – non-recourse means that if anything were to happen the borrower can simply walk away. In case of default the lender can only seize the stock and can’t go after any other personal assets. The borrower can walk away the day it’s funded.

By on April 6, 2022   /   Blog  
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