Modern Capital Solutions allows you to use your publicly traded stock as collateral for a low interest loan without the risk of a margin call.
Modern Capital Solutions can provide loan funds in 7 to 10 days to clients with qualifying stock ownership.
Typical loan terms are a 3 to 5 year term with a 1-2 year pre-payment lock out
Agreeable Payment Structure:
Loan payments are made payable quarterly on an interest-only basis
There is no personal recourse in the event of default on the loan. The only collateral that is held for the loan is the pledged shares of stock.
Attractive Interest Rate:
A typical loan is offered at Prime plus one; slightly higher or lower terms may be applicable given certain variables and conditions.
No Margin Maintenance Requirements:
The structure of the loan does not include the use of margin maintenance requirements
Investor Maintains Upside Potential:
In the event that there is no default, the borrower will retain the benefit of potential appreciation to the value of the securities
The loan will range from 40% to 80% of the current stock value depending on the stock
To get started, you need to provide proof of stock ownership and date of purchase.
Frequently Asked Questions
Q: How can Modern Capital Solutions secure me more money than my broker can, or, in some cases, when my broker cannot lend me money at all?”
A: The Securities Exchange Commission placed restrictions on which stocks brokers can lend against, and on how much they can lend their customers against “marginal” securities. Per our network of conventional lenders, Modern Capital Solutions has a greater range of options available to it.
Q: Why can’t my broker hold the shares for Modern Capital Solutions during the loan term?
A: Stockbrokers are not set up to guarantee that their customers, to whom they owe their first loyalty, will not sell shares. In the case of an emergency devaluation, individual brokers are often overworked and unavailable to make emergency trades to protect even their clients, much less Modern Capital Solutions or our network underwriters.
Q: Where does Modern Capital Solutions keep its stock once transfer is complete?
A: Modern Capital Solutions or network underwriter maintains stock with reputable brokerage firms such as Scot Trade Securities and Merrill Lynch. The accounts, in addition to traditional federal SIPC Insurance, also enjoy $150 million in private insurance for stocks within our network.
Q: Why is there a delay from the delivery of my stock to the funding of the loan?
A: Because of recent changes in the law, stock transfer agents are no longer able to verify clear ownership of securities not in their physical possession. Modern Capital Solutions requires the time to verify clear ownership of any issues received. Prior securities counterfeiting problems and DTC transfer frauds have created the need for these increased security measures, which protect both the borrower, Modern Capital Solutions, and its network.
Q: How does Modern Capital Solutions achieve payment?
A: By official bank check sent by Federal Express Overnight or federal funds wire, directly into your checking or savings account.
Q: Can I redeem my loan early?
A: Yes. Your loan can be redeemed anytime usually with no prepayment penalty. This can be accomplished by either sending the outstanding balance to underwriter, or by calling at anytime and asking to liquidate the portion of stock, used as the foundation for your loan, necessary to pay the outstanding balance. In which case the balance of the stock will be returned to you promptly.
Q: Do I retain proxy (voting) rights for my stock?
A: No. Unfortunately it is impossible for underwriting, which are lenders, not a stock brokerage firm, to pass proxy rights through for the stocks we receive.
Q: Will I continue to receive dividends?
A: Yes. All dividends received for the stocks you have will be forwarded to you. For your benefit, should underwriting liquidate a portion for the stock (for example should the stock drop below the outstanding balance of your loan, or for other reasons permitted under the lending agreement) you will automatically be reimbursed for any dividend lost as a result of the exercise of discretion.