Equity First Holdings is a financial company that provides businesses with loans that are backed by that companies stock. The capital that they raise in this way can be used for any business purpose. Recently, the leaders at Equity First Holdings said they have experienced strong interest shown by companies that want to raise capital in this way, particularly due to the fact that traditional lenders have tightened lending criteria to the point where many companies don’t qualify for traditional lending.
Another problem with traditional lending is that many banks have increased the interest rates they charge. The Founder and Chief Executive Officer of Equity First Holdings, Al Christy, Jr., has pointed out some of the benefits of the stock-based loans his company provides as an alternative. The first is that the capital raised can be used for any purpose. The second is that they offer better interest rates than traditional lenders. Third, a stock-based loan provides these companies with a hedge against a down market in their stock value. The stock-based loans that they provide typically have non-recourse language so that the borrower can walk away from the loan at any time even if the value of their stock is down.
The type of companies that benefit the most from working with Equities includes those who can’t qualify for a traditional loan under the current market conditions but still need capital in order to expand and/or operate their business. These companies can get a stock-based loan under conditions that are beneficial to them and repay the loan in three years. The interest rate they pay is fixed which removes the uncertainty of a variable interest rate. The benefits of stock-based loans is beginning to become understood in the business community which has led Equity First Holdings to become a very busy and active company.