Shelly Bay Capital LLC

Customized Non-Recourse Stock Loan Programs for Sophisticated Investors

Office: 646.281.1221

Fax: 516.627.5106

76 Plandome Court, Manhasset NY, 11030

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FAQ’s

Q - What is a stock loan?

A - Non-Recourse Stock Loan by definition is a loan against the value of a stock or portfolio of stocks whereby the shareholder can borrow up to 80% LTV (in some cases higher) of the portfolio’s market value without selling the shares.   Like a home equity loan for stocks but much better, you borrow against the appraised value of the portfolio, pay a below prime interest rate for the term of the loan and then at term end, you either pay off the loan and receive your stock back with any stock appreciation, refinance the loan or, if the stock price has fallen below the LTV amount, forfeit the shares without paying back the loan (non-recourse) with no liability or effect on your credit rating.

Q - What type of securities can be borrowed against?

A - Shelly Bay Capital, LLC accepts securities listed on all major US Exchanges, smaller exchanges including Pink Sheets and Bulletin Boards as well as many foreign exchanges.  We also have programs for restricted stock both individual and corporate and stock options.

Q - Can I borrow against more that one security?

A - Yes, you can borrow against a basket of securities or an entire portfolio.

Q - Are there minimum and maximum loan amounts?

A - The minimum loan amount is $50,000 however there is no limit or maximum amount.

Q - What are the Loan to Value (LTV) percentages for the loans?

A - The LTV’s vary depending on the quality of the securities being collateralized.   With high quality large cap stocks you can expects LTV’s up to 80% (sometimes higher) while with small cap or pink sheet securities the LTV’s will be more conservative.  Each loan is evaluated on a case by case basis.

Q - What are the costs involved with the loan programs?

A - Our programs have no hidden costs such as application fees, appraisal fees or other upfront costs.  Like a mortgage or home equity loan, there are points charged at the time of funding the loans and there are interest payments on the outstanding loan balance.

Q - What are the interest charges and how are they paid?

A - Interest charges are below prime currently running between 5-6% and are generally paid quarterly however other payment options are available.

Q - How long does the loan process take to close?

A - Unlike the mortgage process that can take months, our loans can close in 5-7 days depending on the speed at which the borrower processes the paperwork.

Q - Are there any restrictions on the use of the proceeds?

A - With the exception of using the proceeds to buy securities on margin, there are no restrictions on the use of the proceeds.  Our clients have used the proceeds to finance other businesses, second homes, college tuitions and a myriad of personal uses.

Q - What are the tax ramifications of stock loans?

A - Because this is a loan and not a stock sale, the transaction is non-taxable until the loan is terminated.  At termination depending upon the termination option selected, there could be tax consequences.  Please consult your tax expert on this subject.

Q - What are the settlement options available at the end of the loan term?

A - At the end of the loan term the borrower has numerous options.  The borrower can repay the loan and receive all the securities back, extend the loan, refinance the loan or exercise the non-recourse provision of the loan - forfeit the shares without repayment with no liability or effect on your credit rating.

Q - Are there pre-payment penalties or can I pay the loan off early?

A - Because the lender is assuming a great deal of risk with the non-recourse provision of the loan, a lock-up period is usually necessary cover those risks.  The lender needs to be able to recoup costs associated with the loan in order to offer the attractive interest rates and points.  If the borrower needs additional flexibility including the pre-payment option, it must be negotiated at the outset of the loan and will affect the cost variables of the loan model.

Q - How can you make money with these loans?

A - We make money from the interest rates and points charged at the funding of the loan as well as utilizing our proprietary hedging and trading strategies to profit during the term of the loan.

"Stock Loan Company-Our stock loan company specializes in non-recourse stock loans.  We create stock loan programs to hedge our clients against stock volatility, over-concentrated positions and possible unnecessary taxes.  Let our stock loan company provide our services for you.  Asset Based Loan-A stock loan is another type of asset based loan similar to a home equity loan only much better.  Our stock loans provide hedging ability while giving the borrower full upside potential on his security.  Let us show you how this type of asset based loan can work for you.

Learn more about stock loans.