What is a non-recourse stock loan?
Non-recourse stock loan by definition is a loan against the value of a stock whereby the shareholder can borrow against a percentage of the stocks market value, at a low interest rate for the term of the loan. At maturity, the loan can be paid off in full or refinanced (provided no default has occurred) and the Borrower will receive back the same number of shares. Alternatively, if the stock price has fallen below the LTV amount, the borrower can simply walk away from the loan without any further consequences or recourse.
How much can I borrow against my stock?
The loan to value ratio (LTV) varies depending on the intrinsic quality of the securities (stock). LTV’s are calculated based on evaluation of the potential risk and future performance associated with the stock. Generally the loan to value ration is 45% – 65%. Each loan’s LTV is evaluated on a case-by-case basis.
What types of securities (stocks) can be used?
Stocks must be freely traded securities. Loans cannot be processed for restricted stock.
How are the loans funded?
Most Loans are funded on a DVP (Delivery vs. Payment) basis, which varies from market to market. Both parties coordinate a delivery date with their respective brokerage firms or securities houses to fund the loan. The stock is transferred to the Lenders account simultaneously to the loan funds being transferred to the borrowers account.
What is the minimum liquidity required for a stock to qualify for a loan?
Liquidity is relative to the size of the block of stock. Generally speaking the loan will be divided into several tranches, each tranche not to exceed 3-10 days average volume.
What are the costs involved with the loan programs?
There are no hidden costs such as application fees, appraisal fees, or any other upfront costs. In the event that a broker or middleman is involved any fees due can paid at the time of funding from the loan proceeds.
Are there minimum and maximum loan amounts?
The minimum loan amount is $500,000 USD the maximum is $100 Million USD.
How long does the loan process take to close?
Loans can close in 5-10 days depending on the speed at which the borrower processes the paperwork.
What are the interest charges and how are they paid?
Currently interest rates range from 4% – 12% depending on the liquidity and risk involved and are generally paid quarterly or semi-annually however other payment options are available.
Which markets / exchanges does Squadron service?
Squadron provides share financing and stock loans for all major global exchanges. If you do not see your country on our list please contact us for more information