Introduction to Securities-Based Loans
In today’s fast-paced financial world, accessing liquidity quickly can be a challenge. That’s where securities-based loans come in. These type of loans allow you to unlock capital by leveraging your existing portfolio of publicly traded securities, whether they’re stocks, bonds, or even crypto. In this post, we’ll explore how securities-based loans work and how they can help you meet your financial needs without selling your valuable assets.
What Are Securities-Based Loans?
A securities-based loan (SBL) is a type of asset-backed financing where you use your securities as collateral to secure a loan. The loan amount is determined based on the value of your securities, typically with a loan-to-value (LTV) ratio of 50% to 90%, depending on the type and risk profile of the assets.
Key Benefits of Securities-Based Loans:
- Quick Access to Liquidity: Unlike traditional loans, where lengthy approval processes can slow you down, securities-based loans provide rapid access to capital.
- Non-Recourse Financing: Most securities-based loans are non-recourse, meaning if you fail to repay the loan, the lender’s only recourse is the collateral (your securities) and not your personal assets.
- Flexible Use of Funds: The funds obtained from these loans can be used for various purposes, including investments, personal expenses, or business expansion, offering greater flexibility.
- Avoid Selling Your Assets: Instead of selling your stocks or crypto to generate cash, a securities-based loan allows you to hold onto your investments while still accessing the capital you need.
How Securities-Based Lending Works:
The process is simple. Once you pledge your publicly traded securities or crypto, we’ll assess the current market value and offer a loan based on a percentage of that value. The loan can be structured to suit your needs, whether you require short-term capital or a longer-term solution.
Key Features of Securities-Based Loans
Securities-based loans provide a flexible way to unlock liquidity while keeping your investment portfolio intact. Here are the key features to consider:
✅ Non-Recourse Financing – Once again, stock loans are typically non-recourse, meaning that if the borrower defaults, the lender can only claim the pledged securities, not other personal or business assets.
✅ Loan-to-Value (LTV) Ratios – Lenders usually offer LTV ratios ranging from 50% to 60%, depending on the liquidity and volatility of the securities used as collateral.
✅ Competitive Interest Rates – Interest rates are generally lower than unsecured loans, typically ranging from 3% to 6% annually, and fixed, depending on the lender, the asset class, and market conditions.
✅ Flexible Loan Terms – Loan durations can range from 2 years to 5 years, with options for renewal or refinancing. Some lenders may impose a minimum lockout period, typically 2 years.
✅ No Restriction on Fund Usage – Borrowers can use the funds for investment opportunities, business expansion, real estate purchases, or personal expenses without restrictions from the lender. However, local regulations may apply depending on the borrower’s jurisdiction.
✅ Quick Access to Capital – Securities-backed loans typically offer fast approval and funding; weeks, not months, with minimal paperwork compared to traditional loans.
Why Choose Us for Your Securities-Based Loan?
At Forbes Le Brock we specialise in providing customised, non-recourse financing solutions, ensuring that you can access the liquidity you need without the stress of selling off your valuable assets. Whether you need to unlock cash for an urgent investment opportunity or to cover personal expenses, we’re here to help.
Access Liquidity Fast Without Selling Your Assets!
Conclusion & Next Steps
Securities-based loans offer a smart way to access liquidity while keeping your portfolio intact. Whether you’re looking to seize new opportunities, optimize cash flow, or hedge against market volatility, leveraging your assets can provide the financial flexibility you need.
If you’re ready to explore how a securities-backed loan can work for you, Contact Us Today. Our team at Forbes Le Brock specialises in structuring tailored financing solutions, ensuring a seamless and efficient process. Let’s unlock your capital and put your investments to work.