Lending Against Securities Increases in Popularity for Individuals and Companies Needing Quick Access to Capital

CHICAGO, June 24 /PRNewswire/ -- The prognosis for the economy and getting much needed capital through bank loans is still problematic. Ask any business owner and they'll tell you: requests for a bank loan often hit a dead end.

Most conventional bank loans (say, $100,000 at a competitive rate) are usually only offered to businesses that can finance their growth without help from outside sources, such as guarantors. The worst candidate for a bank loan is a company that is struggling to pay its bills.

Compound this problem with CEOs, board members and large shareholders that garner much of their compensation from the value of a company's stock. Most stocks are still taking a beating and perhaps the stock's best days may be ahead of it. Cashing out now is not an attractive option to these shareholders and companies.

These scenarios can benefit from lending against securities. Lending against securities is not a new concept, but it's rapidly gaining popularity because it makes sense in today's economy. This form of loan to free up capital quickly is attractive to individuals and companies alike. Primarily because it is a quick process (often done within a few weeks), does not require a credit check and the borrower does not give up the stock if the loan is paid back. These loans are especially attractive because they also offer a non-recourse option. If the stock no longer retains its value, the borrower can walk away from the loan entirely.

Chicago based International Capital Group (ICG) (www.icglending.com) is the global leader in lending against securities. Brian Nord, Managing Partner and Co-Founder of ICG, said this method of lending will continue to be a go-to source of liquidity for the foreseeable future. Nord explained, "Stock loans are very relevant to public companies and large shareholders. Investors that have shares of unrestricted stock look at this as an asset they can lend against easily. This is especially true because stock loans do not involve lengthy credit checks, asset appraisals or graveling with banks. Our clients appreciate that we can customize a lending solution for them and that the risk of calling the loan is minimal. If their security performs poorly, they can simply walk away from the loan. That peace of mind is attractive to many of our clients."

Nord continued to explain that using stock loans to gain liquidity is one reason clients come to ICG. Another reason is because investors are looking for equity collars. Equity collars provide investors a vehicle to limit the downside risk of a stock position at little or no cost, or an investor who is willing to forego upside potential in return for obtaining this downside protection. Collars may also be of special interest to those investors who have one equity position that accounts for a large proportion of their net worth, and who may not be able to reduce the size of this position. For these investors, low cost protection may take precedence over maintaining upside potential.

Whatever reason the investor needs access to capital, the need for lending against securities is sure to continue to be a hot area for investors holding large shares of unrestricted stock – a considerable option to leverage for financing personal needs and company growth.

SOURCE International Capital Group