One of the leading specialty finance firms in the world is Equities First. The company, which has been in business for around a decade, has already provided more than $1 billion in consumer loans to people across the United States, Europe, Asia, and the rest of the world. This also comes at a unique time when more traditional lenders have been cutting back on the level of consumer loans that they provide.
Equities First is a unique specialty finance firm that focuses on providing stock-secured consumer loans. When providing one of these loans to a borrower, the lender will be able to take a first lien position on an existing stock portfolio. Along with the lien, the lender will have the ability to liquidate the stock if the loan payments go into default. Due to this strong level of collateral, the lender is often willing to advance a loan at a high leverage point and charge a low interest rate.While paying interest on a loan secured by a liquid asset may not seem to make sense to some people, there are a lot of situations when it would make sense to take out a loan as opposed to selling the stock. One of the most common reasons to take out a loan is for tax planning purposes.
In the United States, there are a lot of tax benefits that come with waiting to sell a stock. In almost all cases, the interest on a loan will be much lower than the higher tax rate charged.Taking out a loan from Equities First is also a good idea for investment planning purposes. If you believe that the stock will be increasing in value in coming years, or the stock pays a strong dividend, it would make a lot of sense to wait to sell and to leverage the stock instead.