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Don't some banks let you take out a loan for the amount of the capital gains taxes using the shares as collateral? I'm not sure but I could've sworn I heard abo

Don't some banks let you take out a loan for the amount of the capital gains taxes using the shares as collateral? I'm not sure but I could've sworn I heard about this.

jkmcf 10y ago
For public companies, I know it's true. I'm not sure about private companies.
- sjg007 10y ago
  It's basically impossible with a private company.
majormajor 10y ago
If you never get a chance to sell that stock at a high enough price to cover that 35K loan, are you still personally liable for it?
- Rylinks 10y ago
  Generally if a loan is collateralized, you are not liable for it beyond the collateral.
  - deleted 10y ago
    [deleted]
bdonlan 10y ago
It's called margin, and you can only margin (use as collateral) shares that are liquid - i.e. publicly traded.
- owenversteeg 10y ago
  I know what margin is, and it's definitely possible to collateralize a loan with private shares. If you had options for 0.1% of Facebook before the IPO I guarantee somebody would write you a loan. The question I was asking was: does any lender do this as a matter of policy as opposed to one-offs? The answer appears to be yes - Silicon Valley Bank appears to have let customers collateralize loans with private shares.
  - jdmichal 10y ago
    Yes, but before they're liquid they're close to worthless. A bank can't pay their bill with collateral that they can't liquidate after they repossess it. If the company is already scheduled to IPO, that huge risk mostly disappears, so of course someone would write that loan. As for Silicon Valley Bank... They're serving the needs of the individuals around them. It's definitely not a common thing, and you're probably not getting anything close to a car or mortgage interest rate. (But still probably better than an unsecured loan.) From their own copy: [0] > Our tailored lending solutions can help you unlock the value of your private assets and simplify your financial life—in a way many traditional banks can't or won't. [0] https://www.svb.com/private-equity-venture-capital/private-banking-wealth-advisory/ https://www.svb.com/private-equity-venture-capital/private-b...
deleted 10y ago
[deleted]

Don't some banks let you take out a loan for the amount of the capital gains taxes using the shares as collateral? I'm not sure but I could've sworn I heard about this.

jkmcf 10y ago

For public companies, I know it's true. I'm not sure about private companies.

sjg007 10y ago
It's basically impossible with a private company.

majormajor 10y ago

If you never get a chance to sell that stock at a high enough price to cover that 35K loan, are you still personally liable for it?

Rylinks 10y ago
Generally if a loan is collateralized, you are not liable for it beyond the collateral.
- deleted 10y ago
  [deleted]

bdonlan 10y ago

It's called margin, and you can only margin (use as collateral) shares that are liquid - i.e. publicly traded.

owenversteeg 10y ago
I know what margin is, and it's definitely possible to collateralize a loan with private shares. If you had options for 0.1% of Facebook before the IPO I guarantee somebody would write you a loan. The question I was asking was: does any lender do this as a matter of policy as opposed to one-offs? The answer appears to be yes - Silicon Valley Bank appears to have let customers collateralize loans with private shares.
- jdmichal 10y ago
  Yes, but before they're liquid they're close to worthless. A bank can't pay their bill with collateral that they can't liquidate after they repossess it. If the company is already scheduled to IPO, that huge risk mostly disappears, so of course someone would write that loan. As for Silicon Valley Bank... They're serving the needs of the individuals around them. It's definitely not a common thing, and you're probably not getting anything close to a car or mortgage interest rate. (But still probably better than an unsecured loan.) From their own copy: [0] > Our tailored lending solutions can help you unlock the value of your private assets and simplify your financial life—in a way many traditional banks can't or won't. [0] https://www.svb.com/private-equity-venture-capital/private-banking-wealth-advisory/ https://www.svb.com/private-equity-venture-capital/private-b...

deleted 10y ago

[deleted]