A short guide to stock-based loans


Stock trading can sap the resources of even some of the best traders. There is always a desire to go for more and more stocks, so the trader can amass a large portfolio, and that may not leave the trader much money for other things they would like to do. While their trading may pay off in the end, it can take a while for the stock to mature and become worthwhile. As traders wait for profits, they may want to see the world, buy a car, remodel a house or do other things that they were hoping to do with the profits they earned through trading.

Unfortunately, stock trading is often a long-term game, and it is common for someone’s money to be tied up in stocks for years before they start to get a decent return on their investment. They may not be able to do much while they wait on their stocks to grow in value. That is why some investors turn to loans to finance their expenses. If they want to take a trip or make an expensive purchase, they may apply for a loan to be able to afford to do so, not knowing if they will be able to pay the money back on time.

What they may not realise is that there are loans out there that are specially geared toward investors, executives and founders that use the assets they already have to finance themselves. A stock-based loan is a loan where the asset is the publicly traded stock. The stock is the borrower’s collateral, and they do not need to put up their car, house or other valuable assets to secure the loan.

Hong Kong based Qilin World Capital, for example, offers investors a stock loan option that lets them keep publicly traded securities while having the benefits of having some money to work with. This kind of loan is not widely available, nor is it available to anyone but those who have publicly traded stocks. The amount of the value of the stock holdings can determine the amount of the loan that is offered. In other words, the more value their stocks have, the greater their loan can be. The stocks will be assessed by the veteran team before the loan amount is approved.

Most stock loans are roughly three years in length. The repayment terms come with interest, of course, and that interest will need to be paid back along with the principal before the borrower can regain ownership of the stocks.

Stock loans have both potential advantages and disadvantages for borrowers. Some lenders offer what’s called a non-recourse loan, which means that if the stocks depreciate in value while the borrower is repaying the loan, then the borrower is able to walk away from it all. This saves the borrower from risk and allows them to use their stock in ways they would not be otherwise able to. It gives them an opportunity to let their stocks sit and appreciate in value while they enjoy the money their loan. With a stock loan, they can avoid the mistake of selling too soon and missing out on some great stock maturity over time.

This type of loan is available in European, Middle East, South American, and Asian exchanges. It is a unique loan that has already helped a number of traders achieve their goals. Many of them have used the loans to pay for necessities that they might not otherwise be able to afford without selling their securities. While the stock market can be a cold mistress, it is good to see options like stock loans made available for those who are having difficulty with liquidity in the market.

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