securities backed lending
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IntroductionTRANSCRIPT
Securities Backed Lending
IntroductionEurope
Asia
Australia
Canada
Mexico
South America
Africa
Caribbean
Non Recourse Loans (NRL’s) are available for publicly traded stocks in almost every country.
Other securities including mutual funds, bonds registered on Euroclear, and ETF’s trading in US exchanges also qualify for Lines of Credit.
NRL’s are not available for MTN’s, BG’s, SBLC’s and LTN’s.
NRL’s are not available for stocks trading in the following countries:
China, Venezuela, India and South Korea.
Securities Backed Loans or Non Recourse Stock Loans are recognized around the world as an alternative source of working capital for companies and individuals. Typical margin accounts come with 50% loan-to-value, compared to NRL’s that offer of up to 95% loan-to-value. The interest rate is also substantially lower than traditional margin accounts.
The entire process can take as little as 10 days to finalize. The terms are always negotiable, flexible and tailor-made to suit the borrower. There are no maximum loan amounts. The minimum is $100,000.
Securities backed lending is a sensible alternative to margin accounts
Non recourse stock loans are used by global financial services firms, leading asset management companies, investment banking houses, prime brokers, and high-net-worth individuals to retire high-interest debt, refinance margin accounts, for acquisitions and mergers, leveraged buyouts, and bridge loans.
NPG’s strategic relationships with lending institutions provide proven and tested access to funding. The “non recourse” feature means the lender’s only recourse is the collateral (the stock) pledged by the borrower. That means should the borrower decide to walk away from the loan, the lender cannot take legal action or create a derogatory remark in the borrower’s credit history.
Working capital for any purpose
CRITERIA
1. The Average Daily Trading Volume of the stock must be over $30,000 per day over a period of three days. For US stocks the price must be a minimum $5
2. The shares must be Free Trading
TERMS1. Term: 1-3 years2. Title stays in Borrower’s name3. Quarterly or monthly interest-only payments, with interest rates of 3.5% - 7.5%4. LTV as high as 75% for stocks5. Loan can be renewed at the end of term6. There are no prepayment privileges7. There is an Origination of Fee 3%-5% payable when the loan funds are disbursed
The direction of the market and the
fundamentals of the stock are irrelevant
1. The process begins with you providing us the stock symbol, the name of the stock exchange where the stock is listed, and the number of shares you wish to pledge as collateral. Or, you can also tell us how much money you wish to borrow and we can let you know how many shares you will need to pledge for that stock.
2. After we have analyzed the trading pattern of the stock, we will let you know if it qualifies based on the average daily trading volume and price. At this point we also prepare a Term Sheet that breaks down everything from interest rate to LTV and net proceeds to you.
3. If you like the Term Sheet, you simply sign it and return it back to us along with the Borrower Information Form so that we can process the Loan Agreement
4. At this point we will also ask for an account statement, proof of ID, and your banking coordinates.
5. We provide you with a draft of the Loan Agreement. There are no upfront fees at any stage.
6. Once the Loan Agreement is signed we proceed to the loan-issuing phase, which takes a few additional steps.
HOW DO I START?
ISSUING THE LOAN
In order for the loan (or line of credit) to be issued:
1. The Lender sends you account forms to open a “Controlled Account” with a designated Securities Firm (or Bank)
2. Once you open your new account in your name (or company name), you receive a securities account number for the "Controlled Account"
3. You transfer your shares into your new “Controlled Account”. You will have online login access to the “Controlled Account” at this point and maintain control over the account.
4. You then enter into a “Control Agreement” assigning limited control of the account to the Lender. The signed “Control Agreement” is delivered to the Securities Firm. Title to the shares always remain in your name (or company name).
5. The designated Securities Firm confirms that the "Control Agreement" has been executed
6. Funds are transferred to you from the lender the same day by DVP (delivery versus payment)
