HedgeLender LLC of Philadelphia, the company I head, found itself recently in a true “Perfect Storm” for its product, HedgeLoan, beginning in early October as Wall Street sunk and the bailouts begain. The market for this consumer stock loan service couldn’t be better.

How you might understandably ask, could a company that bases its product on the hedging or reduction of risk in stocks possibly find this environment attractive?

First, the price of real estate in the U.S. is at an all-time low in most communities. This means that for those who do have cash liquidity, bargains are to be found everywhere, particularly for real estate investors. And unlike the four-property limit on most conventional real estate loans, there are no such limits on HedgeLoans. An investor could therefore use HedgeLoan to purchase as many properties as they wish — and structure their loan either for quarterly interest payments, or interest accrued terms.

Second, credit markets tightened, and many investors, like consumers, found their bank’s credit windows had shut down. Projects that were half complete now found themselves in limbo while banks demanded extra cash or collateral. Many had nowhere to turn. But HedgeLoan has no connection whatsoever to the credit markets or the creditworthiness of the client.  Our HedgeLoan stock loan set eligibility by the volatility ratings of the stocks that are presented as collateral, not by the client’s credit rating. So credit markets can dry up as they wish — it does not affect our ability to provide HedgeLoan financing in any way.

Third, the value of stocks has declined precipitously. Many investors are loathe to sell their stocks at huge losses just to gain cash liquidity. With HedgeLoan, they continue to remain contractual/beneficial owners of their stocks so that should the shares rise — and in historically low markets, that prospect for good companies must be considered relatively good over the 3-5-years of the client’s stock loan.  The client/borrower’s chance of not only having enough value in their collateral portfolio to pay off the loan but to recoup some or all of the upside beyond that motivates many stock owners to get a HedgeLoan rather than sell.

There’s more. These are quarterly-interest-only or 100% interest accrued loans with a balloon at the end that can bey paid by asking lender to sell enough shares to cover what is owned. These are nonrecourse loans, which means that should the portfolio by chance go the other way and fall, the borrower can walk away in default and the lender has no recourse to come after any other client assets, since their stocks — even at Enron like prices — must be treated as complete fulfillment of the loan obligation.

But what, I was recently asked, about the crackdown on hedge funds that many believe is around the corner? Well, HedgeLender does not operate a hedge fund, and our product is good no matter whether hedged funds become tightly regulated, or not. We’ll remain a private, consumer, stock-secured loan company delivering loans one client at a time.

You can get more information on HedgeLender stock loan financing by visiting our website, www.hedgelender.com