Securities Lending and securities financing are two sides of the same coin and are basically stock loans.

Simply defined, a borrower is someone who is in a resource deficit and is looking to rectify that. A lender has a resource surplus. They are willing to let go of excess resources with the promise of repayment. A borrower borrows from a lender – and a lender lends to a borrower. The resource in question is almost always money.

If you’re looking to understand more about the borrowing and lending process, here’s a guide to the basics of loans.

Parts of a Loan

To better understand borrowing and lending, it helps to break down the anatomy of a loan. That way, you can understand which parts are influenced by whom.

  • Loan Amount. First, there’s the loan amount. That’s how much money a borrower needs to make up their resource deficit. It’s also how much a lender is willing to finance from their own resource surplus.
  • Repayment. The borrower generally pays back the loan amount within an agreed upon timeframe. The terms of this are outlined in a promissory note, which is essentially a loan term agreement.
  • Interest Rates. Repayment will be at an agreed upon interest rate. Interest rates can be quite high – even prohibitively so – when sourcing from a large financial institution.

Pledging Collateral

If you need to borrow a lot, you may have to source your financing from a combination of different lenders. (Though borrowing from many places can hurt your credit and end up feeling like you are juggling too many pins to manage.) This is because of the risk associated with loaning someone money.

Big banks and large lenders are often wary of giving away large amounts of assets. After all, there is always the risk that the borrower may not pay it back. As a form of insurance that they’ll get back what they lent you, you may be required to pledge collaterals.

This collateral will be liquidated in the event that you fail to meet the terms of the loan. These assets pledged as collaterals can be any investment holdings you may have. They may include your business assets or even something of personal value like your car or house.

This is where a stock loan differs from a traditional loan. Here at Platinum Global Bridging Finance, we offer non-recourse stock loans for borrowers who are wary of large financial institutions. We accept non-marginable securities as collateral for your loan. You’re not at risk of damaging your credit or losing your house to Platinum Global Bridging Finance. All you pledge are your securities. When you have paid off the loan and any accrued interest, we will return your securities to you.

Types of Lending & Lenders

There are many different types of lending in the financial world. These all depend on who is borrowing the money and for what purpose. Most private consumers are familiar with mortgages, credit card financing, and loans for personal use like home renovation, and so on.

For business startups, loans can be an integral part of getting a company off the ground. Many small businesses seek assistance from lenders to buy equipment, rent office space, or expand a preexisting company. Large business entities will also borrow as a means to raise enough capital to fund a new venture.

Getting a business startup loan is notoriously difficult, even for people with exemplary credit. Additionally, it can be hard for people to secure personal loans from banks for larger sums of money. When large financial institutions deny loan requests, there are other options available to borrowers. They include:

  • Credit unions
  • Peer-to-peer lenders
  • Private party loans (i.e. borrowing from relatives or friends)
  • Crowdfunding (often through an intermediary, like Kickstarter)
  • Stock loans

Credit unions may have similar restrictions as traditional banks. Peer-to-peer lending is often favored for its comparatively low interest rates. However, securing large sums can be difficult. Private loans and crowdfunding are subject to their own set of risks and poor outcomes.

Fortunately, stock loans provide a reliable chance for individuals and businesses to acquire immediate liquidity. Such liquidity comes in sums that are typically only available through large financial institutions. Here at Platinum Global Bridging Finance, we value your loan against the securities pledged as collateral. That means you can keep your investment portfolio diversity while getting the funds you need – immediately.

Choosing the Best Option for You

The first step towards seeking a loan is determining what you need the loan for and how you plan to pay it back. You’ll also want to factor in if you anticipate any significant return on investment. In other words, if you plan to use the money you borrow to make more money.

The first place most borrowers check is their bank or credit union. These institutions are equipped to make loans both small and large. However, they are often quick to decline if they think it’s risky.

Peer-to-peer lending is quite reliable. However, along with private loans and crowdfunding, it can be limited and make it hard to raise enough significant funds.

Platinum Global Bridging Finance is here to work with both individuals and businesses, whether you’re seeking a loan for personal use or for startup costs. We lend to people that traditional banks ignore. Our clients use securities to value loans and act as collateral. Furthermore, we don’t penalize for sudden falls in share prices. That means if the value of your stock plummets after the promissory note has been signed, your loan agreement or amount won’t change. For borrowers looking for options outside traditional banks and credit unions, stock loans are a safe, confidential, and effective option.

The Bottom Line

Large financial institutions can make it hard for people and businesses to secure the immediate liquidity they need. That’s where we come in to help.

Here at Platinum Global Bridging Finance, we find our calling in lending to those in want of a non-recourse stock loan. Our team will work with you from step one to make sure you understand the terms of your loan. We’ll lay out the duration, determine the value you’re eligible for, and provide the funds you need in just a matter of days.

For more information, contact us. We are ready to help at any time.

Platinum Global Bridging Finance is a distinguished high-net-worth finance broker. We specialize in providing tailored financial solutions, including Property Bridging Finance, Development Finance, Stock Loans, and Commercial Property Finance, tailored to meet the diverse needs of our clientele seeking robust financial support.

By on August 21, 2020   /   Blog