A. B. Nicholas began as a company brokering financing for franchisees and commercial real estate developers. When the Great Recession hit in 2009, our lending programs, even for those with excellent credit, became much more difficult. We knew we needed to find another option.
Our Founding Partner, Dan Stafford, after years of working for the Department of Commerce in Washington D. C., left his position to assemble a “can do” team of professionals who understood our clients and what they required. We remain a client-success-focused company to this day.
Securities (Stock Portfolio) Collateral…The Right Way
Trained at the University of Chicago, Stafford that year looked over all possible funding alternatives, joined with new partner Don Johnson to bring in SBA and Franchise funding expertise, and after a careful analysis of all options, settled on the concept of a tailored securities-based line of credit that would be available to brokers and other referral agents in the franchise and real estate investment markets.
With securities’ prices mostly bottomed out at the time, using a stock portfolio as collateral would potentially make sense particularly if portfolios were more likely to rise in the mid-term future, eventually. And if the loan instrument was designed the right way to minimize risk as much as reasonably possible, it could be crafted into an asset-based loan pathway into the otherwise recession-reeling, loan-shy banks — developing banking relationships “through the back door” so to speak that might be parlayed later into conventional business financing down the road to expand or add to the client’s holdings.
But to make it work, we needed a custom line of credit without the frills, service add-ons, or lender-side fees, easily accessed but without the standard mandatory brokerage management costs especially, sometimes as high as 3% of the value of the portfolio.
“Just financing” were our bywords, but would any brokerage or bank be willing to forego all those fees? It turned out that the answer was “Yes”: our persistence paid off.
Most our A. B. Nicholas clients wanted financing-only, not expert investment advice. That was not easy; every brokerage and bank in the country was pressuring its agents to bring in cash via added-service fees, especially during the recession when profits were so low. So after numerous turndowns, we finally located a licensed FINRA-registered advisor with a background in commercial real estate at brokerage giant Morgan Stanley who understood our concept and was willing to give it a try. After tightening up ABN’s compliance parameters and tailoring the financial product to a pure, borrower-type market (not an investor market), LeverageLine was finally born.
In time we added Marie Wood, an expert in operations management, to handle our myriad paperwork and accounting for both clients and agents. We then recruited hundreds, then thousands of top-notch referral agents from some of the the biggest franchise and commercial business real estate brokerages in the country.
Today our staff and agents total over 2,000 in every state of the union, and we have processed over 200 million dollars worth of client portfolio loan applications with a Better Business Bureau rating of A+ and zero complaints over ten years. Ours is a niche market — but it is a niche market we run well.
What’s in it for our licensed lending institutional partners if there are no mandatory lender-side fees? Simple. Any new accounts that come in, even if not managed, is calculated and credited to that Agent for purposes of bonuses. The more new LeverageLine portfolios he/she brings in, the higher that Agent’s bonus is going to be each quarter.
No company overview would be complete without discussing our clients, too, who helped define LeverageLine product from the start.
The type of clients we serve demanded no mandatory lender-side fees, very competitive interest rates, high loan-to-value, interest-only repayment, and speedy turnaround with a solid path to conventional financing later on. From our first major licensed lender-partner to our current three major providers and FINRA-member advisors with stellar backgrounds, the LeverageLine stock loan program was gradually able to achieve a wholesale-rate stock-secured-loan with an eye on the future.
Our staff at A. B. Nicholas is tasked, by agreement with our lending partners, with ensuring portfolio eligibility. For eligible portfolios (see requirements) we help prospective clients understand how the LeverageLine process works and answer any questions about their collateral stocks. We issue our term sheets with figures and approval from our licensed lending partners, and deliver the offer securely to the client. In this way, our term sheets are pre-approved financing quotes usually delivered within hours of application.
Our duties are simple: we confirm eligibility, answer questions, and move the application to the lending institution securely. We then build the lenders’ terms into a clear term sheet and deliver for signing via a secure, encrypted digital system. Once signed, we set up an introduction to their partner within the institution, the lender advisor — an experienced, licensed FINRA-member professional and an expert carefully selected for knowledge of securities-based lending services, franchise financing, and commercial real estate financing, with an impeccable record and multiple licenses.
A. B. Nicholas is, however, compensated a percentage of the maximum credit line, a one time charge similar to points on a mortgage, payable after we’ve delivered as promised from the credit line 03desired or by credit card. We carry out this work as a business enterprise service for our clients (not the lending institution) and receive no compensation or incentives of any kind from our licensed lending partners. Our duty is to provide the best securities finance we can, and nothing less.)
A. B. Nicholas serves many of the big franchise and business brokering firms, should they need a securities finance component for their clients. These firms trust A. B. Nicholas to deliver, and we are proud to say we do — every time.
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Institutional Advisor Team
Licensed Lender Advisors
Registered Agent Team
Registered ABN Agents
Organization Firm Team
G. Donald Johnson
President, A. B. Nicholas
Principal, Diamond America & Franchise Leasing. 20+ years experience in business finance. B. A., Fairleigh Dickenson University
20+ years in business administration and accounting for financial firms. Director of Affiliate operations, applications, and services.