Stock | Loans

Unlike selling shares, the borrower retains ownership and continues to receive dividends , rights issues, and benefits from any appreciation in the stock's price.

In a typical stock-based loan, the borrower pledges a portion of their investment portfolio to a lender, who then acts as a on those assets.

Traditional credit checks are often less rigorous because the lender already holds the collateral, allowing for rapid disbursement—sometimes within 24 hours . Risks and Market Sensitivity loans stock

Despite the benefits, stock-based loans carry significant risks primarily tied to .

If the market value of the pledged stock declines below a certain threshold, the lender may issue a margin call , requiring the borrower to provide additional collateral or pay down part of the loan immediately. Unlike selling shares, the borrower retains ownership and

If the borrower cannot meet a margin call, the lender has the legal right to unilaterally sell the shares to recoup the loan amount. This can lead to substantial losses, especially if the sale occurs at a market bottom.

Lenders provide funds based on a percentage of the market value of the pledged shares. LTV ratios typically range from 15% to 45% for private shares and up to 50% to 90% for more liquid public equities or diversified portfolios. This can lead to substantial losses, especially if

Because the loan is secured by liquid assets, interest rates are generally lower than those for unsecured personal loans or credit cards. Rates are often tied to benchmarks like the Secured Overnight Financing Rate (SOFR) .