metroBanc™ Capital Advisors

Why would I want or need a stock loan?
Why not a margin loan?
What are the LTV's?
What are the interest rates?
Is the interest rate fixed?
What kind of securities can I borrow against?
What is the eligibility criteria for the stock?
Can I borrow against more than one stock?
Can I borrow using options?
Is there a minimum or maximum amount I can borrow?
Will anyone be notified of the loan?
Is my personal credit checked?
Will ownership of the stock be transferred to the lender?
How long does the loan take to close?
Are there restrictions on the proceeds?
What about my voting rights and dividends?
Can the lender use my dividend as a payment on the loan?
Can I prepay the loan early? Is there a fee?
If the loan defaults or I walk away, is anyone notified?

Why would I want or need a stock loan?
A shareholder of a large block of stock may never need to hedge or gain immediate liquidity. However that being said, the strategy of borrowing against stock to meet a myriad of financial goals is sound enough that in almost any case the argument can be made as to why it could be done. Access to liquidity and capital.. a hedge in a bear market.. a means to alleviate margin debt.. there are too many reasons to list.

Why not a margin loan?
A margin loan has terms that are poor in comparison to a true stock loan. Start with the fact that margin loans are capped at 50% LTV with FULL recourse in the event of a default. To learn more about stock loans vs. margin loans, please click here.

What are the LTV's?
Typically the LTV's on free trading shares are 35-80%, with stocks trading well on the three major exchanges reaching the highest LTV's. Weak pink sheets and bulletin boards will receive lower LTV's. A higher LTV is not always in the best interest of the borrower and a prudent lender will attach a sensible LTV based on the security pledged.

What are the interest rates?
Interest rates are typically as low as 5%, up to prime+1 or Libor+1, however on extremely volatile or low volume stocks the interest can run as high as 12%. A lower interest rate is not always in the best interest of the borrower and a prudent lender will attach a sensible interest rate based on the security pledged.

Is the interest rate fixed?
Yes. All of our lending products carry fixed rates.

What kind of securities can I borrow against?
We will accept shares trading on the NYSE, NASDAQ, and AMEX, as well as some bulletin boards and pinks sheets. We will also accept shares trading on most mature foreign exchanges including Australia (ASX), Canada (TSX), Germany (DAX), Hong Kong (HKEX), Israel (TASE) Korea (KRX), UK (AIM), and Shanghai (SSE)

What is the eligibility criteria for the stock?
The shares must have a minimum three months of healthy volume, and have been trading on the exchange for no less than 6 months. Share price is not always the most important factor, nor is market cap. We will look at every stock on a case by case basis.

Can I borrow against more than one stock?
Yes. We will look at a portfolio of securities, however there must be a block of at least $25K worth of securities per symbol being pledged.
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Can I borrow using options?
Yes. We will arrange up front funding in order to convert the options into shares, and fund the difference to the borrower at closing of the stock loan. To learn more about stock loans using options, please click here.

Is there a minimum or maximum amount I can borrow?
The minimum loan amount is $100K, and there is no maximum.

Will anyone be notified of the loan?
No, the loan is completely private. The only individuals that may be made aware of the transaction will be at the borrowers discretion such as counsel, accounting professionals, etc. To learn more about this and other unique stock loan benefits, please click here.

Is my personal credit checked?
No. There are no credit checks, referrals, background checks, asset checks, etc. We require only limited information in order to originate a stock loan.

Will ownership of the stock be transferred to the lender?
Yes. The shares must be held by the lender as collateral, and will be transferred to the lenders account before the loan can fund. This is typically done electronically through DVP.

How long does the loan take to close?
A free trading stock loan can fund in as little as five business days from inception.

Are there restrictions on the proceeds?
Only that the proceeds can not be used to purchase marginable securities. To learn more about the use of proceeds from a stock loan, please click here.

What about my voting rights and dividends?
In most cases voting rights will be retained either directly or by proxy. Dividends are also retained and will be either returned to the borrower or applied to the balance of the loan, either case being at the lenders discretion.

Can the lender use my dividend as a payment on the loan?
Some lenders will allow this practice, again it will be the sole discretion of the lender and will be set forth at the inception of the loan.

Can I prepay the loan early? Is there a fee?
In almost all free trading loan scenarios, the loan will not be pre-payable.

If the loan defaults or I walk away, is anyone notified?
No. There is no action or suit, and there is no reporting to the credit bureaus, Dun and Bradstreet, etc. To learn more about the benefits of a stock loan, please click here.

For more information about a stock loan, please contact our office.
For an online quote request, please use the short form on the right side of this page.