How to Get Cash Without Selling Your Stocks
(NewsUSA) - In good times, Americans invested their money in the stock market. Now, as rising fuel, food and housing prices push more people into debt, investors might feel tempted to sell their stocks for cash.
But when common shareholders sell out their investments, they put downward pressure on the market. If common shareholders flood the market with stocks, the value of that stock goes down. This could put more businesses in the red, pushing the national economy further into its downward spiral.
Options do exist for common shareholders who need cash, whether to refinance a loan or to put a child through college. Mike Brette, the CEO of MB Private Equity Capital, LLC, a company that raises equity for businesses, believes that stock loans are a terrific option for common shareholders.
"The LTV (loan-to-value ratio) can be 50 to 75 percent, and if the stock price goes up during the term of the loan, you can participate in the appreciation," says Brette.
In a stock loan, common shareholders use their stock as collateral to borrow money. If shareholders have stock, they have the ability to get cash -; the stock loan process does not involve margin calls, credit checks or personal guarantees. Shareholders can usually borrow 75 percent of the value against their stock, including any OTC, bulletin board or pink sheet stock.
If shareholders sell their stocks, they can no longer make money on them. But this isn't true of stock loans -; investors, as they pay off their loan, see their original stock returned. Selling stocks triggers tax liability, but loans do not. Borrowers can default at any time -; if they must default, the lending company takes stock, not cash, in payment. Shareholders can use their loan money for any purpose, including tuition bills and car and home payments.
For more information about stock loans and how they benefit investors contact us today.