101 - The Advantages
A stock loan from Saris Capital provides the borrower with almost unprecedented advantages almost across the board when compared to other types of traditional or alternative lending instruments.
100% Limited-Recourse Transaction
According to Investopedia, the definition of “Limited-Recourse” when applied to debt or a loan is:
“A Limited-Recourse debt is a type of loan that is secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral, but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount. This is one instance where the borrower does not have personal liability for the loan.”
In other words should there be a default on the loan by non-payment, or other default provision, the borrower simply forfeits the collateral shares and just walks away with no further obligation. There is no further personal liability for the loan, there are no margin calls or other demands, and there are no negative consequences on personal credit or corporate worthiness (D&B).
100% Upside Protection
Saris Capital considers “upside” to be the value of the stock in excess of the price when the stock was pledged as collateral. The upside on a stock currently priced at $5.00 that was pledged as collateral at $4.00 would be $1.00. At loan termination after all interest only payments and final loan amount payment has been made, the shares are returned to the borrower or unliened if in a Saris Capital approved brokerage. We will not request any of the upside as part or our agreement, all upside remains with the borrower.
100% Transparent Transaction
All details of the transaction are worked out in advance, there are no surprises when it is time to sign the loan docs. We work closely with our clients so that there is full transparency and disclosure around all of our documents. Borrowers are encouraged to seek their own counsel as well, from well qualified professionals.
100% Private Transaction
Saris Capital is a private firm. Any reporting or notifications of the transaction are strictly the prerogative and responsibility of the client, we report to no one.