Types of Stocks and Uses of Funds
Generally, there are two types of stock loans available in the market. However, these two distinct types have several variations from lender to lender and offer a variety of options and choices.
Free-Trading Stock Loans: Stocks that are traded to the general public on NYSE, AMEX, NASDAQ, and many NMS, OTC BB, Selected Foreign and Pink Sheeted stocks are or can be qualified for stock loans.
With our free trading stock loan program you retain many of the advantages of stock ownership while gaining the benefit of using the equity you have built in your investments. Just some of the advantages of borrowing from us are.
- Immediate liquidity: Borrow up to 80% of the market value of your stock
- Low interest rates stay fixed starting at 2.99%.
- Term- Choose a term between 3-5 years.
- Dividend retention- Receive each and every dividend declared by your company without interruption.
- No up front fees. Most transactions close within 5-7 days.
For Example
For example, if you own a large amount of free-trading shares with a market value of over $2.00 per share with strong steady volume over a several weeks period, your loan options will be broad. On the other hand, if the stock has low volume and you own limited shares, your loan options will be narrower. Contact your New Vision Global Capital Partner representative today with your particular scenario.
Restricted Stock Loans: Programs are available for stocks that are held with restrictive Rule 144 and are compliant with all SEC, FRB and UCC laws and regulations. These transactions are limited to securities traded on the NYSE, AMEX and NASDAQ exchanges. Generally, restricted shares must be held for no less than 6 months. Stocks remain in the owners name, dividend and voting rights remain and the transaction is completely private. While these loans are more extensive in terms of due diligence, they offer the investor options that were once not available to restrictive stock owners by margin or bank loans.
Loan proceeds can be used for: Many good uses of funds including; funding real estate transactions, expanding your business, diversifying investments, debt consolidations and refinancing out of margin loan transactions before a call are just a few of the uses for stock loans. Any worthwhile legal reason is perfectly accepted for stock loan transactions.
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Monetization Strategies
Prepaid Forward
Investors can receive significant liquidity with no limitations on the use of proceeds through a prepaid forward agreement. A prepaid forward agreement allows an investor to obtain a minimum sale price for a stock (typically equal to 80%-90% of today’s stock price) as prepayment for its forward sale without triggering a taxable event until maturity. The investor contracts for price protection at a specified “floor” price and participates in potential appreciation up to a specified “cap” price. The investor forgoes any price appreciation above the “cap” price. At maturity, the investor owes an amount that varies depending on the stock price at maturity. If the stock price is below the floor, the investor will deliver to the lender 100% of the shares underlying the contract. If the stock price is between the floor and the cap, the investor will deliver a number of shares equal in value the floor price plus the difference between the stock price and the cap price. Investors have the option to cash settle the contract if they prefer to keep the stock at maturity. Typically, the investor will pledge 100% of the shares as collateral.
Personal and Commercial
Luxury Purchases, Tax Payments, Education Costs, Medical Expenses
Weddings, Debt consolidation, Business start-up or expansion
Business acquisitions, Diversification for concentrated securities positions, Emergency expenses.
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