In essence, single stock loans are just like a standard Lombard loan where securities are used as collateral by a lender. The lender takes custody of the shares for the loan term and offers the borrower a credit line in return. However, single stock loans are typically more complex to arrange than 'standard' securities-backed lending, where the borrower's portfolio is generally more diverse. Many lenders will view single stocks as riskier collateral than a comparatively more varied portfolio.
Single stock loans remain a relatively niche market area, and mainstream lenders don't always offer this type of borrowing, especially for borrowers seeking significant capital. Enness has access to all lenders in this part of the market and will know which lenders to approach, whatever your situation and financing requirements
Lenders generally like to see liquid and high volume stocks in this part of the market. That said, if you have an illiquid portfolio or stocks with a low trading volume, don't assume lenders will be deterred. It's possible to get a single stock loan in many different circumstances, and a partner like Enness will help you source the best deal.
Your identity, background, wider situation and total net worth can also play a part in whether a lender will offer you a loan and what terms they will offer. As with any securities-backed lending, the presentation of the facts is critical to success. Showcasing your situation fully, accurately and providing lots of detail and context can help a lender offer competitive rates and terms.
Despite the careful assessment of stocks, you will be able to access capital quickly. The underwriting process for single stock loans is relatively quick (especially compared to other types of borrowing). Lenders will move swiftly to make a decision and present terms, particularly if you want to borrow a large amount or have a particular profile.