Many people know they can use stocks and bonds to purchase other financial securities, and diversity an investment portfolio. However, a frequently overlooked aspect of investing is leveraging stocks and bonds for unsecured credit and loans. This week, we are going to explore how this process works in order to give a general overview of of this diverse financing solution.
Unsecured Credit Does What Bank Loans Cannot
Business owners and commercial real estate investors frequently meet obstacles when trying to borrow money from banks and other traditional lenders. The requirements are often prohibitive for entrepreneurs without perfect credit and a strong history of borrowing (and repaying) robust amounts of capital. As an alternative, people are looking to their own assets, and structure lines of credit around their stock portfolios.
Unsecured Credit From Stocks Does Not Mean A Transfer Of Title
Entrepreneurs sometimes believe that this type of financing means a title transfer in order to get access to unsecured credit. The truth is there is no title transfer. Stock portfolios continue to gain interest and generate dividends, and ownership still belongs to the individual. The portfolio is simply used as collateral, and the value of the stock is used as a basis for the unsecured credit line or loan. The stock put up as collateral is placed into a management account, which is presided over by top level brokerage members to ensure your investments continue to generate appreciation. This type of financing is also not limited to stocks and binds. Luxury items, such as boats, automobiles, jewelry, artwork, and even rare bottles of wine can be used to back these lines of unsecured credit.
Who Can Use Stocks For Unsecured Credit?
This funding solution is open to anyone with a decent portfolio or amount of luxury goods. The lines of credit are used by commercial real estate investors looking to acquire property, franchise owners, and even small business owners looking to start a leveraged buyout. Instead of fighting through red tape to secure a traditional bank loan, entrepreneurs are letting their stocks and investment portfolios do the work for them to get access to lines of credit. The best part is that as the value of the portfolio grows, the spending limit on the lines of credit also increases.
If you would like to learn more details about leveraging your investment portfolio for an unsecured line of credit, call Abel Commercial Funding at 301-200-9801. We work with entrepreneurs at all levels to ensure their financial needs are met for continued growth and success.