Adams Named Authorized Representative for Collateralized Equity Loan Program

If you’ve been looking for business loan programs

for some of your clients, here is a new entry into the market from an old friend of the cash flow industry.

Archie Adam’s ADA Business Credit Corporation (ADA) is a Florida corporation, a licensed mortgage broker and an authorized representative for the lender of the equity collateralized loan program. In addition to its other various business and real estate loan programs, ADA can now provide equity collateralized loan funds in seven to 10 business days to clients with qualifying stock/securities ownership. The general parameters are as follows:

Equity collateralized loan

This program is designed for a forward-thinking investor who wants to retain the future ownership of their assets as well as leverage the present value of their securities for immediate cash needs. Benefits and terms of the loan include:

• Low interest rates — usually between 3 percent to 5 percent.

• Rates are fixed — usually between three to five years but may go longer.

• High loan-to-values — up to 80 percent, much higher than banks and brokerage companies can offer.

• Loans are interest only — principal payment at

maturity. Loans can be refinanced or extended.

• Loans are non-recourse — giving the borrower the opportunity to “walk away” if the collateral falls below a set floor amount.

• Loans are “non-purpose” — they can be used for virtually any borrowing need (except for placing in a margin account).

• Borrower maintains beneficial ownership —

borrower keeps all upside market appreciation. In addition, borrower receives credit against their interest payment for all dividends or interest on bonds. It is a loan (not a constructive sale) per section 1058 of the Internal Revenue Code.

• Loans can be funded in seven to10 business days.

• Loan fees will vary depending on the size of the loan and will be disclosed at the time of the loan proposal.

A securities loan is not a margin account. These loans have significant advantages over conventional margin loans.

The lender will first determine the viability of the loan and then calculate a loan-to-value ratio and the interest rate, based on an assessment of both short-term and long-term risks. Eligible securities include stocks, bonds, and tradeable mutual funds. Retirement accounts (401K) are not eligible.

Before a loan can be funded, a “strike price” (the per-share price recently traded to determine the value) must be set. The lender uses a fair and equitable three-day average pricing model for every loan it transacts. The strike price is based on an average of the closing prices of the collateral for

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