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Today, we’re announcing the launch of Secfi Loans, a new way for startup employees to get the cash they need to exercise their stock options, or to get liquidity from the shares they already own.

Employees will now have a choice: traditional loans with Secfi Loans or non-recourse financing with Secfi Financing. To date, we’ve provided nearly $500 million in financing to help startup employees own their stock options, with more than $1.3 billion in secured capital readily available for future financing.

The first loan designed for startup employees, and their equity

Secfi Loans come in two flavors — a fully amortizing loan, with a fixed monthly payment of principal and interest, and an interest-only loan with a balloon payment at the end of the loan term.

Most personal loans only offer a maximum of $100,000, with many traditional banks offering people maximum loan amounts below that. If you’re looking for financing to exercise employee stock options, your stock option-related costs can easily soar into hundreds of thousands of dollars. In 2021, the average Secfi customer needed $543,000 to exercise their stock options, and pay for associated taxes.

With Secfi Loans, we’re offering people loans of up to $10 million, depending on various factors, using the borrower’s credit profile and other assets, notably their startup stock, and, most importantly, the value of their stock options. Both loan types will have interest rates as low as 4 percent. Customers will need to repay the entire loan amount, plus interest and fees.

The difference between Secfi Loans and Secfi Financing

Traditionally, Secfi has offered non-recourse financing through Secfi Financing. With Secfi Financing, customers offer up their stock options as the underlying backing asset. None of their other assets — such as their real estate, savings, or investment accounts — are included in the transaction. If the customer’s company fails, Secfi only recuperates losses in the form of the customer’s equity.

However, over the years, we’ve heard from customers who say they’re bullish about their startup’s prospects, and are willing and able to assume the risks associated with a loan, in return for lower rates. We’re launching Secfi Loans to provide a select group of borrowers that additional flexibility and choice.

As with any loan, borrowers will need to fit specific credit criteria, such as excellent credit history and enough assets to indicate they’re capable of repaying their loan. Our loan criteria is unique in that it also includes startup equity as part of a borrower’s assets.

Secfi Loans are recourse loans — for example, if you borrow $500,000 using Secfi Loans, you’ll need to pay back the full amount, plus interest and fees. Traditional loans carry higher risks than non-recourse financing, and they won’t be a good fit for everyone.

Secfi Loans are also designed to offer startup employees stock option liquidity. In some cases, startup employees exercise their stock options and are forced to wait for years for their company to either go public or get acquired. With Secfi Loans, those employees can use their equity to secure a loan to make other big purchases, like buying a house.

Today’s announcement allows us to offer our customers an expanded range of options when working with us. Click here to explore stock option financing with Secfi.