The world monetary crisis has raised vital questions on how global policy frameworks regulate, monitor, and manage global liquidity. In public and international financial structure, liquidity is negatively impacted by excessive volatility. In that line, G20 has been working hard to bring about the best solutions. Before they have been focusing on essential array of financial and banking reforms but have stopped to address the vital challenge of calibrating world liquidity in order to cater for the global economy necessities. To date, acquiring a conventional loan is really a challenge, but small business and individual investors have sought other better means of acquiring affordable working capital. The number of stock loan borrowers has been on the rise and Equities First takes pride in providing innovative solutions at a time when the world is fighting a lot of monetary issues.
The urgency of changes is reinforced by various factors and most well among them is; in the next decade, developing economies will probably account for at least 50% of the world financial assets, with a number of systematically vital financial institutions emerging, especially in Asia. Another factor is the timing and prospect of the US Federal Reserve as the interest rates are on the rise. The rise coupled with the new concern regarding retrenchment in world capital flows, has added weight on the significance of liquidity management as a world public necessity.
Central banks have worked to do this amid crises by highly increasing the amount of swap agreements. But they have also stopped due to establishing of institutionalized world swap network, which is understandable as they are basically driven by domestic mandates. The trend of borrowing stock loans has increased with various investors reaping the benefits of alternative lending solutions offered by Equities First. The loans come with various benefits which include small interest rates, higher loan to value (LTV) rates, non-purpose and non-recourse features among other gains.
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Equities First is a leading specialty-finance firm, which provides a unique financing option to consumers. Equities First currently specializes in providing loans to consumers, which are secured by stock portfolios. This unique financing option comes at a time when other lenders are shying away from all types of consumer loans.
When giving out a new loan, Equities First will take a lien on a borrower’s stock portfolio. This gives the company the ability to liquidate the stock if a situation arises in which a borrower is not able to pay back their loan. In many cases, Equities First will provide a loan equal to up to 90% of the stock portfolio that a borrower pledges. Further, due to the strong collateral position, the lender is also able to offer low interest rates compared to traditional personal loans.
While consumers may consider just selling their stock as opposed to taking out a loan, there are two key situations when it would make more sense to hold on to the stock. The first situation is when selling would go against your investment strategy. If you believe that the stock will appreciate in the future, or continue to pay dividends, it could make a lot more sense to hold the stock until the price hits your target. The dividends and appreciation will likely far outweigh the cost of the fees and interest.
You should also consider taking out a stock-secured loan when you are looking to avoid paying higher taxes. In some countries, you will pay a higher tax rate if you sell the stock after owning it for a short period of time. In these situations, it would make a lot more sense to continue to hold the stock and wait to sell until you can avoid paying higher interest rate.