PROCESS
Stock Loan Eligibility
The process begins with a shareholder identifying a need for capital. All that is needed to begin preliminary underwriting is the loan amount desired and the number of collateral shares available to put against the loan. These shares must be unrestricted and free trading in order to be eligible. We will need the stock exchange and the ticker symbol(s) of the securities in question.
The stock loan’s underwriting department can take this basic information and determine generally within a day whether this stock is eligible. Key factors to determine eligibility are liquidity levels and market cap. We can loan against securities on many exchanges across the world.
Preliminary Underwriting
Determine your capital needs and the eligibility of your stock as collateral. This includes an initial evaluation of the loan amount and the value of the shares.
Term Sheet
Issuance
Review and agree on the term sheet provided, which details the loan terms, interest rates, and conditions.
KYC and Documentation
Complete the Know Your Client (KYC) process and submit all required documentation, including personal and financial information.
Loan Agreement and Funding
Finalize the legally binding loan agreement, transfer the collateral shares, and receive the loan funds. This step ensures that all legal and financial aspects are in place for the loan disbursement.
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Once initial eligibility is established the stock loan provider will issue an official Term Sheet outlining the terms, conditions and mechanisms of the loan. The Term Sheet is not an official offer and does not constitute a legal agreement but is merely the basis on which a legal agreement will be built. The Term Sheet must be signed and returned within 4 days of issue to remain valid.
When a signed Term Sheet is submitted, the stock loan provider will issue an official KYC document. This is a very important part of our underwriting process. The stock loan provider is obliged to meet all global KYC and Anti – Money Laundering (AML) regulations and requirements. It is imperative that this document is filled out completely and all supporting documentation be submitted along with the KYC.
Supporting documentation generally includes:
- Identification documents for individual borrowers.
- Current brokerage statement showing the shares that are to be pledged (other balances may be hidden).
- For Corporate borrowers – documentation showing signatory authority as well as Corporate proof of address. (i.e. a utility bill showing the corporation name and address).
Once the fully completed KYC and all supporting documentation is received by the stock loan provider– the real underwriting process begins. Generally, within a week an Official Loan Agreement is issued. This document is legally binding and outlines the final terms, conditions and offering on the table. This document must be signed by the borrower and notarized and returned to the stock loan provider. Initial documents can be emailed but originals of the document must be mailed directly to the stock loan provider.
Immediately following confirmation that the collateral shares are transferred to the Custodial Account, the loan funding occurs immediately and the proceeds are deposited in the location and currency of the share owner’s choice.
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Frequently
Asked Questions
Eligibility is assessed during preliminary underwriting based on the value and type of your stocks
A term sheet outlines the terms and conditions of the loan, including interest rates and repayment terms.
KYC documentation typically includes personal identification and financial information.
The timeline varies but generally initial underwriting, term sheet issuance, KYC documentation, finalizing the loan agreement, and signing the closing statement usually takes between 14-21 days to complete.
Funds are disbursed after the closing statement is reviewed and signed. Depending upon jurisdiction of exchange, this can take anywhere from 24 hours to three days plus.