1. Bank loans cannot be used for equity investment? Why is it okay to borrow money from a trust?
Because equity investment is a high-risk, high-yield product, its volatility program exceeds that of stock trading in the secondary market. Bank loan funds are not even allowed for stock trading, let alone equity investment. Trusts are geared toward high-net-worth individuals. It is generally believed that such high-net-worth individuals have higher risk tolerance and are more judgmental about capital investment.
Relatively speaking, although banks and trusts are both supervised by the China Banking Regulatory Commission, the supervision of banks is relatively strict. Banks can only sell financial products to customers. As for other loan standards, they can only be carried out in accordance with the relevant requirements of the People's Bank of China and the China Banking Regulatory Commission. The interest rates are also determined by the state (only a few rural commercial banks can float). The proportion of loans and the amount of capital accounted for are subject to strict regulatory restrictions. As for trust, since it is not a loan in a pure sense, but only refers to collecting funds and lending money, the form of trust can be much more flexible than that of banks.
Trust loans and investments have the characteristics of transformation. During the periodic trust investment, the trust company finances the enterprise through the company's shareholders repurchasing equity and converts the equity financing into debt financing. It can not only appoint directors to participate in operations and decision-making with shareholder qualifications, but also let shareholders bear the responsibility when designing products. The repurchase obligation and the third party's guarantee for the repurchase obligation expand the guarantee channels for debt repayment.
2. Can the loan be used for equity investment?
For mergers and acquisitions loans, it is more reliable to take the trust channel. Generally speaking, bank loans are not allowed to be invested in equity targets!
3. Why do companies with bank equity borrow from trusts instead of banks?
There are three reasons:
First, bank equity cannot be mortgaged to the bank.
Second, there are bank restrictions and the loan approval time is relatively long.
Third, trust loans are more flexible. In fact, the cost difference between the two is not big.
When it comes to equity pledge, in real life, we should all have heard of procedures such as pledging cars or houses because of urgent need for emergency funds. In fact, let us first understand the concept of "pledge" today and expand the scope of knowledge!
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1. What is “equity pledge”?
1. The meaning of equity pledge
A type of equity pledge is to assume the guarantee responsibility for the performance of debts and pledge its shares to creditors (banks, etc.). When a debtor appears When the debt is not performed or an incident occurs, as the debtor he has the money to enjoy the priority of the stock. The "equity" includes not only the funds contributed by the shareholders of the limited liability company, but also the capital of the joint stock limited company
2. Reasons for a company to pledge equity
If a company decides to identify the company’s difficulties and urgently needs funds to supplement its cash flow.
Generally speaking, this is equity pledged
If a company needs 20 million in funds recently, and stocks are pledged when financing, if the discount rate is 50%, then it can be obtained Only 10 million. To prevent the risk of being unable to repay the principal of the bank, the bank has set up an early warning line and a closing line to prevent its own interests from losing 40-160% or 130-150%.
Also, there is an upper limit on the company's equity pledge. The stock pledge rate is usually half a year to two years, which is determined by the company's qualifications. This aspect really deserves our attention - pledging is not allowed.
3. Where can I view the relevant content of equity pledge?
There are still many query websites, such as the official websites of listed companies, certain financial terminals, etc. In the stock market, you must learn to pay attention to the company's equity pledge information, in addition to other important information.
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2. Equity Pledge Is it a good thing or a bad thing? Will it have an impact on stocks?
Equity pledge is equivalent to a financing tool, which can be used to fill cash flow and improve the operating status of the company.
However, there are still potential risks, such as loss of control.
Whether the impact on stocks is good or bad needs to be analyzed based on specific issues.
1. A situation that is good for stocks
If a company pledges equity to obtain working capital for the purpose of operating its main business or launching new projects, it can be regarded as a good thing. No matter how you say it, this is conducive to the expansion of territory. Also, if the pledged shares are circulating stocks, that is, the number of shares of the stock stored in the market has been reduced, the demand has remained roughly the same, and the amount of funds required to raise the stock has become smaller, and it is at the forefront of the market. , it is relatively easy to start the market.
2. Bad stock situation
If the purpose of a listed company is only to repay short-term debts and expenditures unrelated to the company's development plan, instead, the company's financial distress will surface, which will Reduce investors' expectations and favorability towards the company. In addition, if the equity is highly pledged, if this really causes the stock to fall or even fall below the warning line, if the securities company sells the pledged shares, it will easily lead to a bad reaction. If the securities company sells the pledged shares, it will affect the market's response to the stock. Bullish sentiment may ultimately lead to a decline in stock prices.
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4. I would like to ask, what is the use of shareholder loans? Equity investment is not allowed, why use borrowed money...
I came a little late and couldn't get a good sofa! hehe. I also express my own opinions below, for reference only.
1. Equity investment is the funds used for equity investment in a limited company. According to the provisions of the Company Law, divestment of equity investments is not allowed. However, shares can be transferred. Therefore, in order to ensure the stability of equity capital, relevant laws stipulate that shareholders are not allowed to make equity investments in the form of loans or borrowings.
2. Shareholders can apply for liquidity loans or borrowings for the company’s operating needs. This must be done after the company is established, and must be used for company operations, not equity investment.