How Increased Transparency and Better Regulations Have Attracted Borrowers to Stock-Based Loans

Equities First Holdings, LLC posted impressive gains in the fist-financial half of 2016. This was an unexpected turn of events especially considering the disparaging state-of-affairs in the global financial lending world. In recent times, banks have made it next-to-impossible for borrowers to acquire the necessary funding for capital investments. According to the CEO and Founder of Equities First Holdings , Al Christy. Jr., stock-based loans are innovative solutions because of their higher loan-to-value ratio as compared to margin loans and their lowered interest rates.


A majority of loans typically extend over three years. And, as is common knowledge, it is impossible to escape-the terrible-market fluctuations over that duration. The stock-based loan, on the other hand, has some cushion against this rattling-effects of the markets. The consumer is protected by the non-recourse feature which makes it possible for them to walk away from that loan at any given time.


Margin Loans Versus Stock-Based Loans


Christy went ahead to spell out the differences between margin loans and stock-based loans. The only similarity joining the two options is that they both use securities as collaterals. Interest rates are flexible, and the loan-to-value ratios ranging 10% to 50%. Another feature is that the lender has the right to terminate the contract and proceed to liquidate the collateral of the creditor if a margin call arises.


Stock-based funds, on the other hand, have a fixed interest rate of around 3-4%. The loan-to-value ratios are much higher as from 50-75%. The loan comes with few restrictions, and you are at liberty to use the funds as you please. The no-recourse feature does not apply here.



Many mainstream investors have ignored them because this industry has been a haven for unscrupulous lenders in the past. Lenders who made away with the collateral holdings and the stocks of their borrowers. Christy, however, noted that the increased transparency and regulations now in place meant that fewer unbecoming incidences occurred.


About Equity First Holdings


EFH remains at the forefront of providing competitively-rated loans to business and high net worth individuals. Beginning 2012, borrowers have secured financing solutions capital using their stocks as the only collateral. So far, the company has transacted a total of $1.4 billion. They now operate from 9 countries.


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