Securities Based Fractional Funding, (SBFF) and Equities First Holdings, (EFH), have formed an alliance to provide securities based financing to luxury fractional buyers, owners and developers. 

Mortgage financing to buy fractional interests has been in very short supply over the last couple of years. Some developments have offered there own "developer" financing or have organized financing through smaller local banks, but there have not been any national or international lenders in this market. This new company is aiming to change that.

Steve Gordon, SBFF partner, noted that “today’s fractional investor requires a product that fills the gaps created by the credit crunch. Lending against the borrower’s securities portfolio eliminates those gaps and provides many other unique financing advantages over a traditional mortgage, margin loan, cash such as”:

  • 100% non-recourse
  • Below-market, fixed rate loans ranging from 2.5% to 4.5%. Rates are based on the performance of the security.
  • Quarterly interest-only payments which are offset by any declared interest/dividend.
  • Borrower retains all beneficial interest in pledged securities.
  • Loan to securities values ranging from 35% up to 80%. The more liquid and actively traded, the higher the ltv.
  • No Appraisals, Credit reports or Project Approvals.
  • Not income or credit driven.
  • No maximum loan amount (100k min.)
  • Simple application process; consists only of a review of the most recent portfolio statement(s).

The Securities Based Fractional Financing loan enables borrowers to obtain funding at below-market rates by pledging the securities they own, under a collateralized re-purchase agreement, as collateral for the loan.

Eligible securities are publicly traded stocks, bonds, tradable mutual funds, unit investment and real estate investment trusts as well as foreign positions on certain international exchanges. Ineligible securities include privately held stocks and securities held in retirement accounts. Successful stock-lending transactions have been executed involving the American Stock Exchange, NASDAQ, NYSE, OTC Bulletin Board and certain foreign exchanges.