Security Backed Loan
A Security-Backed Loan (“SBL”) is a loan collateralized by shares (“Collateral Shares”) of a publicly
traded company stock, which can be a useful tool for short or long term borrowing needs of an
individual or publicly listed Companies.
Shares can be traded on many major markets such as: Hong Kong, Singapore, Malaysia, Thailand,
Philippines, South Africa, Turkey, France, Italy, etc.
SBLs are a simple and effective financial instrument that allows the Borrower to maintain a position
in the market (no need to sell stock), while creating liquidity to meet an immediate monetary goal
Because of the non-recourse nature of our loans, clients are able to use this product not only as a low
risk source of liquidity, but it can also be used as a hedging tool to protect gains in the value of the
equities being offered as collateral.
Key Highlights
Allied’s loan structures offer a wide range of benefits, including some notable difference from those
offered by banks, securities brokers and other counter-parties:
● Non-recourse (i.e., no additional personal assets needs to be pledged as security/borrower’s
risk is limited to the collateral shares)
●Loan amounts can range from under $1M USD to over $100M+ USD per tranche
● No margin calls
● No Short Selling
● Even micro-cap/small-cap shares acceptable as collateral
● LTVs typically ranging from 40% to 65%
● Loan terms can range from 24 to 60 months
● Fixed annual interest rates typically below market rates (3.5% to 7% per annum)
● Ability to retain upside market appreciation
Anticipated Process Timeline
| Week 1 | ||||
|---|---|---|---|---|
|
Borrower submits inquiry for
loan by providing a stock
symbol, number of shares to
pledge and target loan
amount. Lender determines
the viability of the loan, and
calculates a loan-to-value ratio
(LTV) , duration and
the interest rate, based on an
assessment of both short and
long term risks. Lender issues a term sheet to borrower. Terms are negotiated & finalized. Borrower signs term sheet, completes questionnaire, and sends copy of passport and brokerage statement to lender. |
||||
| Week 2 |
Lender receives Term Sheet
and sends contract to borrow
for review. Final contract is negotiated & signed. |
|||
| Week 3 & 4 |
Borrower opens brokerage
account at lenders designated
brokerage firm. Both parties coordinate a delivery date with their respective brokerage firms for delivery of collateral. Once lender has been notified collateral has been delivered, the loan is funded according to the loan agreement. |
