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I have the opportunity to buy up to $1 million dollars of private equity shares in a very profitable business.
Any advice on how to go about getting the maximum loan possible?
Yearly salary is $300K, good creditscore around 690
My adviser said to open up a Merril Lynch LMA (loan management account) and borrow against my assets, but that only gives me 25% of what i need.
I am willing to pay higher interest rates as the rate of return on my investment option is 30% annual dividends and i believe i can pay off very quickly the loans.
Seems sketchy to take out $1,000,000 in loans to buy stock. I obviously don't know the details but I caution you on assuming something is "risk free". Don't let the potential return cloud your judgement. Sorry I can't help in any way.
I wish I could help you find a good loan...because anyone who thinks it is a great idea to take out a huge loan in order to buy stocks needs a pretty substantial personal education that this is the same type of behavior that had people jumping out of buildings in the great depression.
If some one approached you for this then you should realize they don't think of you as an investor, they think of you as a mark.
You can't take a personal loan out for this. The business itself has to, and should be, the guarantor of your loan. Banks, individual investors, financial organizations and anyone else you might think of asking the money for don't really care what income you have or what assets you want to pledge, although they would be glad to have them thrown in. What they really want to see is how much cash flow you will generate with the new business in your hands less the money you'll have to pay to service the debt. If you can make $300,000 in cash flow and the debt is issued at 10% so it costs you $100,000 to service the debt, then most would be glad to do this deal as long as they feel pretty confident of the $300,000 cash flow.
You don't buy "private equity shares". There's no such thing. There are different CLASSES of shares, and different constructs for an investment. You REALLY need to get a lawyer involved if you are serious about this. Are you even sure you are buying equity and not debt? If debt, what debt? What seniority? If equity, what dilution clauses are you facing? What seed round are you in on? Is there a pay-to-play clause? ETc etc etc.
Politely, you are in way over your head for an investment that size. You need someone familiar with investment law involved.
30% annual return promised is almost certainly some sort of con game.
The people who are capable of genuinely earning 30% return are not giving those profits to anyone else. They don't need you and your borrowed money.
Ponzi scheme comes to mind.....
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