In an article from the Financial Times by Edi Truell, he writes about Equities First Holdings is changing how high-profile individuals decide obtain loans. Equities First Holdings makes it easier to provide people with loans. With banks tightening their loan requirements, it makes it much harder for potential borrowers to obtain loans. With firms, such as Equities First Holdings, make it easier for borrowers to obtain loans in two ways: margin-based loans, and stock-based loans.The first one, is that they offer margin loans to borrowers. If someone wants a loan for his or her company, he or she would have to give Equities First Holdings a percentage of the company.
Although this loan requires the same form of requirements as a traditional bank loan, a margin loan has less restrictions on what specific purpose for where the capital is going to within the company. With bank loans, there are often stringent requirements with how the money can be spent, and high-profile people see the benefits of obtaining a loan with Equities First Holdings instead.The second way that Equities First Holdings innovates with their lending, is they also offer stock-based loans.
As the name implies, a stock-based loan will have the potential client give Equities First Holdings a portion of the company’s stocks for a loan. Once the loan has been paid off, the stocks will be returned to the company. With this option, borrowers are given fixed interest rates from three to four percent. The value of the stocks must range from 50 percent to 75 percent of the worth of the loan, as well. A benefit to using this form of lending with Equities First Holdings is that a borrower can simply exit the loan without fully paying it off, even if the value of the stock has decreased.