Short Term Loans Using SBLC, BG, CMO, CD, T-Bills, Corporate Bonds, Etc. Used as Collateral

Loan Using Pledged SBLC as Collateral

Our loans may be used for any legal purpose.

We can make a fully non-recourse loan against virtually any international or national publicly traded financial security instruments issued by virtually any major bank at 60-90% LTV (of face amount), for the period of one year, renewable.

The minimum transaction size is $10 million – no maximum.

The financial instrument must be able to be assigned, pledged, liened, and/or delivered to Lender’s bank,  and thereby used as collateral. (Leased SBLC does not qualify) If the instrument has been issued by a small US bank, or any foreign (non-US) bank, a major international correspondent bank is a requirement. (Provide this additional information).

At the end of the term, borrower has 2 options: we cash in the security to pay off the loan, or borrower repays the loan and we return the security.

Interest rates range from 6% to 8% depending on the collateral, plus 5-8% in points, not including the intermediaries.

Points and interest are deducted and prepaid at closing, and the Client receives the net proceeds, to be used for any legal purpose.

At the end of the term, in the event that the financial instrument is cashed, the “excess proceeds” are fully rebated to the Client without offset. (Face amount is greater than the loan amount, and the difference is the “excess proceeds”.)

We protect intermediaries up to 2 points on any deal and pay the fees from loan proceeds at closing based on a fee agreement and specific instructions from the borrower.

 Deposit for Legal

A $15,000 deposit is required for the legal fees to prepare the transaction documents/closing documents, as well as to pay for any transaction costs and filing fees that might be incurred. Wire instructions are to be provided.

To Proceed

  1. Provide a copy of the financial instrument(s).
  2. Provide a copy of  the ACTUAL account statement showing the current holdings for the security instrument
  3. A Term Sheet will be issued based on items #1 and 2 above, for review and acceptance by Borrower.
  4. After $15,000 deposit for legal is received by Sterling, Master Loan Agreement and collateralized loan addenda (drafts) are ordered, using all details contained in this Term Sheet. (It will take 3 to 5 days for documents to be completed.)
  5. Master Loan Agreement and collateralized loan addenda are issued to Borrower..
  6. When deemed acceptable, Client executes Master Loan Agreement and collateralized loan addenda and returns them directly to Sterling.
  7. A special purpose bank account is then established for this specific transaction (It will be either JPM or WFC per the loan docs).
  8. Client then receives specific bank coordinates on where to deliver the original instrument
  9. Deliver instrument to Lender’s bank.
  10. Receiving bank verifies the instrument.
  11. Loan is funded (the “net loan proceeds” – net of Lender points and interest), on T+3 settlement timetable. If the position size is greater than $25 million, the loan distributions will tranche every four (4) trading days.
  12. The use and distribution of Borrower’s net loan proceeds is completely managed by Borrower.

 Loan Contract Document Details

We need the following information to issue loan closing documents:

  1. Borrowing entity name
  2. Borrowing entity address

iii.     The person’s legal name and address, along with all the contact info (email and phone) of the person(s) who have the authorization to sign for the Borrowing entity

  1. Subject collateral general description
  2. Provide transfer details such origination, quantity, settlement date and the transfer type e.g. DWAC, DTS, DRS, etc.

We prefer NOT to use SWIFTs, RWA, POF and other routine banking transaction procedures which are often unnecessarily costly. However, we can issue these documents for additional fees. Ask for a quote.
Repo Loan using Assigned Collateral

Alternatively, we may do a Repo Loan, where we take ownership of the financial instrument, and hold it for the term of the loan. The loan amount is up to 90% of the bid value of the collateral.  The Borrower has the right to repurchase the security at any time up to one year, at a cost, for example, of 72%, which represents 6% interest and 6 points (excluding intermediaries).

[This pricing is illustrative only, and may differ depending on the collateral].

If you want to extend the loan, you may at a cost of 6% interest – no additional points are required.

For any such loan, there is a prepayment penalty for early repayment of 6 months interest.

We routinely take 5-10 business days to close this kind of transaction.