– Making Real Dreams Come True –
Every LeverageLine client is different: this we can say from ten years of experience. Each need is unique, each application specific to that client’s needs. Here’s one example case we recently completed that shows how A. B. Nicholas Securities Finance provided the funding this borrower needed to realize a lifelong objective.
Let’s call her Sandy, a 57 year old former law clerk and cycling enthusiast who moonlights as an aerobics cycling instructor. Sandy has been prudent with her finances over the years, amassing an excellent credit record and over $800 in stocks and bonds, plus $100,000 in savings. Her dream? To open her own cycling and cycling aerobics business.
The franchise she wanted was one called Cycling USA. In addition to a great reputation for service, good advertising support for franchise branches, and a top-notch training program, Cycling US provided initial inventory and equipment too.
The cost was $750,000, including licensing fees, taxes, additional inventory, staff for the first year, and other expenses. She was woefully short.
Like many people, Sandy had seen her stock portfolio rise since President Trump took office. What was in 2016 worth about $450,000, had now grown to over $800,000 in value. If she sold them, she’d lose out on any future portfolio growth, cash in her retirement nest egg, and pay 20% on the gain of $350,000 – a whopping tax bill of $70,000.
Researching her options on the Internet, she saw she could go for an SBA loan. But they would only loan her $300,000 — far short of the $750,000 she needed. Her brokerage could give her a 50% loan on her stock portfolio holdings, but the rate was a whopping 7.9%..
Sandy found us at A. B. Nicholas at that point and we went to work.
Her portfolio, which was at TD Ameritrade (one of the three brokerages with which A. B. Nicholas has a special partnership), and could stay right where they are but receive an 85% credit line at 3.4% – almost half that of current 15 year mortgage rates. That 85% got her $680,000, which, together with $70,000 from her $100,000 in cash savings, got her exactly what she needed while leaving $30,000 for emergency use.
But there was more. Because she came through A. B. Nicholas, her credit line was a personal asset-based loan with interest-only required for repayment and no maturity date. She could repay some or all of the principal whenever she wanted. And she’d only pay interest on what she actually drew from her $680,000 line — she wasn’t required to take any set amount at all. This allowed her to dole out the funds as needed, and not to pay interest on what she wouldn’t need until later — a big cost savings.
She still wanted to trade in the account and did so a few times in the first three months. There was no penalty. She asked to have three months of no interest due to preserve cash flow for her first payroll cycle. She was allowed to put the interest payments back on the loan principal to keep current cash devoted not to loan repayment, but to employee salaries.
Sandy had also heard about the A. B. Nicholas promise: that clients who manage their credit line responsibility will move to the front of the line for conventional business financing later. This meant that by beginning her financial relationship with her LeverageLine, she was building up credit with her lender for unsecured or low-security business credit later. This mattered to her because she had every intention of opening up two or three Cycles USA franchise sites in the near future. She’d need a financial partner to do that, of course, but she’ll have one. Through ABN, she has also opted to begin a Dun & Bradstreet credit file that will allow her business to become a de factor borrower rather than herself.
In this case, the client got much more than she’d ever have gotten with a much smaller SBA loan that would have put a lien not just on her stock portfolio, but all of her other tangible assets with no forgiveness. Instead, her stocks are still working for her, still in her name and account, still accessible online as always, but now have an excellent credit line ready to use. The future looks bright.
You too can obtain a LeverageLine and our quotes are free. Apply at www.abnicholas.com/quote today.
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