Our field of finance here at A. B. Nicholas is geared to obtaining competitive offers for our clients so as to save them significantly on interest costs while helping them obtain the amount of credit against their stock portfolio commensurate with their needs, typically the largest amount possible. The LTV – loan-to-value – in our business is referred to as the “release rate”. The higher the release rate percentage, the more cash you will have available to draw from your securities-based credit line. The rate is applied against the total current value of your stock portfolio.
The financing terms we offer our clients (via our lending network) are delivered directly from your lending institution advisor. He’ll quote you a release rate and a simple interest rate. The latter is a figure based on prime rate and certain internal calculations unique to each institution, usually based on economic projections, inflation, stock volatility and cost analysis, together with an evaluation of the LIBOR (London Interbank rate) and the U. S. prime rate. These factors are used to determine the interest rate he will quote you.
Your offer’s financing terms will therefore include two percentages — a simple interest rate and a release rate. This will form the core of your offer. Other features may be included at no cost, though our lenders understand that you are under no obligation to to undertake any of them. Our clients seek a credit line or loan only. Anything else must be optional.
We have also cautioned the lenders in our lending network to against “up selling” our clients. This is the process whereby our client’s application is entered into the network for a quote, an offer is chosen, but then at some point the lender advisor begins to “upsell” — attempt to sell you additional unwanted financial products — in prohibition of the A. B. Nicholas rules they agreed to when they joined our network. Our clients come seeking a credit line or direct term loan. They do not come looking for investment advice or other financial products. All such “add-ons” are entirely optional, and only with the consent of the ABN client, who has no obligation to utilize or pay for any of them.
All the same, every offer delivered to our ABN clients is considered a pre-approved offer based on your application and brokerage statement. Unless there are extenuating circumstances not mentioned in your application (e.g., dispute over marital assets etc), the offer is assured. Having your financing terms in hand, particularly in business and real estate applications, can be a major factor in successfully landing the right business, franchise or location with cash in hand.
Your financing terms always include the freedom to repay your loan interest-only if you need to preserve cash flow. Pay the principal when you wish, as much as you wish for our standard LeverageLine. This provision is also spelled out at the time your offer is made. As a result, the financing terms you receive as an ABN network client are locked in when you receive them.
This ABN LeverageLine network puts maximum control over how much you draw from your line, into your hands. It’s a concept described as “being your own banker”, since you can draw as much or as little as you wish, when you wish, up to maximum release authorized. Lowest interest rates go to the largest cash release from the portfolio. Those with an authorization greater than their need are eligible to draw any amount at the premium, lower interest rate no matter how much is drawn, even if you choose to draw o only a small amount. This is why most ABN clients ask for the maximum possible credit line against their stock portfolios, even if they do not intend to use it all. This is because the more that is authorized for release, the lower the rate of interest for any withdrawal. In fact, some borrowers obtain a LeverageLine offer and then never draw from it at all, at no cost to them. For them it is just cash instantly available for emergencies, like an insurance policy.
When it comes to stock loans or other securities-backed financing, our network provides the confidence of knowing you can have a firm, pre-approved credit line offer, quickly closable, with low, competitive interest and a high, competitive release authorization, to use for whatever you require (other than the purchase of more marginable stocks with the credit line proceeds, the only prohibition). It is also timely, closing in about five business days on average.
Skeptical? Understandable. We urge you to apply today and see for yourself.