STOCK LOAN PROCESS*
1) Borrower submits a stock loan request to lender by providing the stock symbol, exchange, and loan amount desired.
2) Lender determines if the loan is viable; if it is, lender provides borrower with a quote that details the basics:
loan-to-value (LTV), interest rate, loan term, loan amount, and payout terms. If basic terms are acceptable to borrower,
3) Lender creates a TS (term sheet, i.e. a loan commitment) for borrower review.
4) Terms are finalized, and borrower signs and returns the TS to the lender.
5) Lender sends contract (i.e. security agreement) to borrower for review.
6) Contract is finalized and borrower signs contract with the local custodial bank.
7) Borrower opens new stock account at local stock brokerage designated by lender.
8) Borrower instructs his/her current broker to transfer shares (usually electronically broker-to-broker) to the new account.
9) Security agreement is submitted to the stock broker to govern the new account.
10) Lender wires loan proceeds to borrower.
* Procedures can vary slightly by country. In some countries, share ownership needs to convey to lender prior to funding. These details will be provided upfront with the initial quote, and TS.