Securities Backed Lending

Securities Backed LendingSecurities-based lending (SBL) refers to making loans using securities as Collateral. Securities-based lending provides financing on a timely basis without liquidating any security holdings. To suffice your expected or unexpected liquidity requirements, we can provide you with access to capital using your marketable securities, such as stocks, bonds, funds investments, etc., to use them as Collateral.

Securities Based Lending is the most cost-effective way to access liquidity strategically. We facilitate Securities-based lending through a Term Loan or a Line of Credit (Securities Based Line of Credit/SBLOC). The interest rates on such loans are typically lower than other types of loans backed by real estate or other liquid assets.

There are various use cases where the proceeds generated from SBL could be used:

  • Investing Back in the Business as Owner's Equity to boost the book value: If you are an Executive in a Publicly Traded or a Privately Held organization and want to increase the book value of the company, you can borrow a loan against your equity stake within the company and inject the capital back in the company as Owner's Equity. This will open up a new cash stream for your business, allowing greater shareholder confidence and ultimately boosting the Market Cap and the stock price.
  • Real Estate or Construction Bridge Loans: Real Estate loans come with a mortgage downpayment and additional closing costs. Assuming you have a payment due within seven days towards the closing of your real estate, securities-backed loans can be of great help. We can provide you with an indicative term sheet within 24 hours so you can plan toward your closing costs.
  • Payment towards a Margin Call: If the broker who lent the funds to invest in assets is now calling back some of the loan amounts, an SBL could be served as a firefighter to execute the transaction and pay off the Margin amount. If there is a payment towards a loan due, funds could be used from the proceeds of a Securities Backed Loan.
  • Personal Expenses: For Tuition, Wedding, buying real estate, or opening up a new business, SBL is helpful as it can open up a flexible stream of liquidity in a matter of 72 hours.

What can be used as Collateral?

  • Publicly Traded Stocks
  • Investment Grade Bonds (Municipal, Corporate, Government)
  • Investments in Commodities (Gold, Oil, Soybean, etc.)
  • Investments in Hedge Funds or Mutual Funds
  • Limited Partnerships in other funds
  • Exchange Traded Funds (ETF)
  • Cash or other Cash Equivalent Deposits
  • Private Equity Stake

Details of a Securities-Backed Loan

  • Loans available from $75,000 to $125,000,000
  • Up to 85% LTV on Investment Grade Bonds
  • Up to 80% on Public Equities and Fund LP ownership
  • Up to 70% on Private Equities
  • KYC, AML, and Credit Check Required

Interest Rates

  • Line of Credit: Competitive rates set as spreads to 1-Month Term SOFR
  • Margin Lending Rates: Rates are set at the discretion of Avon River Ventures

Securities-Based Lending v/s Selling Investments.

  • Suppose there is an opportunity that requires $500,000 in 2 days. You have two options: sell some investments from your portfolio of assets or opt for Securities Based Lending. You researched and determined the costs and risks of choosing one over the other.
  • Potential Cost of Selling Assets: Assuming a 5% market return and 15% capital gain tax on half of the sold investment value, you would miss out on a $25,000 market return and incur $37,500 in taxes amounting to your total cost of selling the securities $62,500.
  • Potential Cost of Borrowing (SBL): Alternatively, if you borrowed $500,000 at 3.25% (interest + other capital costs), you will pay $16,250 against your pledged securities and will be able to take back the ownership once the loan gets paid back.

We are seasoned Securities Backed Lending Facilitators and can help you with any capital requirement ranging from $75,000 to $125,000,000 within 3-6 business days.