KEY TAKEAWAYS
- Equity-backed financing at EquitiesFirst is a sale-and-repurchase arrangement: title to the shares transfers to the firm for the term, and an equivalent number of shares is returned on repayment.
- The shares are held by a third-party custodian, not by EquitiesFirst directly.
- During the term the shares form part of EquitiesFirst's proprietary portfolio, which it may trade. It does not short the shares or lend them to third parties.
- The borrower keeps economic exposure to the stock, including dividend entitlement, and keeps any upside at maturity.
- The financing is non-recourse: at a margin event the borrower can post more collateral or walk away, keeping the proceeds and losing only the shares.
For a founder or long-term shareholder, raising cash against stock triggers one question that sits above interest rates and loan-to-value ratios: will I get my shares back? It is the right question to ask of any equity-backed financing arrangement, and the answer turns on how the transaction is structured, what the lender may do with the shares during the term, and what happens at maturity.
How the financing is structured
Equity-backed financing at EquitiesFirst is a sale-and-repurchase arrangement. In exchange for cash, typically at 60–70% loan-to-value and 3–4% interest, title to the borrower's publicly traded shares transfers to EquitiesFirst for the term of the financing. Because the title transfers, the shares are returned as an equivalent number of shares of the same class at the end of the term, rather than the specific certificates originally delivered. This is standard practice for title-transfer securities arrangements.
Where the shares sit, and what happens to them
During the term, the shares are held by a third-party custodian. Title rests with EquitiesFirst, and the shares form part of the firm's proprietary portfolio, which its investment team may trade and rebalance. What the firm does not do is short-sell the shares or lend them to third parties.
The borrower keeps the upside
On repayment at the end of the term, an equivalent number of shares is returned to the borrower, who therefore keeps their long-term position in the company. If the stock has appreciated over the term, that gain belongs to the borrower, not to the lender. The financing is a way to raise cash against a holding while keeping long-term economic exposure to it.
Dividends and exposure
Because the borrower retains economic exposure to the stock, dividends the shares are entitled to during the term are applied as a credit against the interest expense of the financing, or distributed to the borrower. The shareholder's relationship to the company's performance is preserved through the life of the financing.
If markets move
Under EquitiesFirst's terms, a margin call is triggered at 80% of the loan value for equity facilities, and the borrower is asked, by written notice, to top up with additional stock within a five-day window. What happens next reflects the non-recourse structure: the borrower can post more collateral or terminate the transaction, keeping the loan proceeds already received with no further obligation. The most they stand to lose is the shares themselves.
While the non-recourse structure means the borrower's liability does not extend beyond the collateral, the underlying market risk, including any decline in the value of the shares during the term, remains with the borrower throughout
In short
Put together, the arrangement is straightforward: title transfers for the term and the shares are held by a third-party custodian; EquitiesFirst may trade the shares but does not short them or lend them to third parties; economic exposure and dividends stay with the borrower, including the risk of a decline in the value of the shares during the term; and an equivalent holding is returned at maturity. For a shareholder deciding whether to raise liquidity against a concentrated position, those are the terms that matter most.
Frequently asked questions
Yes. EquitiesFirst's financing is a sale-and-repurchase arrangement in which title transfers for the term, so on repayment an equivalent number of shares of the same class is returned to the borrower. Because publicly traded shares of the same class are interchangeable, the returned holding restores the borrower's original position in the company. Full terms are on the firm's FAQs page.
Yes. The borrower retains economic exposure to the stock throughout the term, so dividends the shares are entitled to are applied as a credit against the financing's interest expense or distributed to the borrower.
If the margin threshold is reached (80% of the loan value for equity facilities), the borrower is asked by written notice to top up with additional stock within a five-day window. Because the financing is non-recourse, the borrower can instead terminate the transaction, keep the loan proceeds already received, and part only with the shares used as collateral.
Because the financing is non-recourse, a borrower who chooses not to repay parts with the shares and owes nothing more. The firm's only remedy is the collateral itself, so it cannot pursue the borrower's other assets, and the borrower keeps the loan proceeds already received.