Collective Liquidity Launches Zero Interest Option Exercise Loans
Collective partners with WebBank to advance unicorn employees the funds they need to exercise their options free of interest1 or stock fees
NEW YORK, Feb. 27, 2024 (GLOBE NEWSWIRE) — Collective Liquidity, Inc. today announced the launch of Option Exercise Loans for unicorn employees. The loans will pay the employees’ exercise price on their stock options. Where some private market lenders charge interest rates and stock fees that can result in annual borrowing costs in excess of 20% annually, the Option Exercise Loans, issued by WebBank and available through Collective will charge a 0% interest rate and have no stock fees. Borrowers will pay just a 2.5% loan origination fee2 (estimated APR 15%). By combining the new loans with Collective’s existing solutions, Collective enables employees of private growth companies to seamlessly exercise their options, reduce their risk, obtain immediate liquidity, and start building long-term wealth all in a single transaction.
Before they can sell the shares underlying their options, employees of private growth companies must pay the exercise price on those options. Previously, if they didn’t have the funds to pay the exercise price, they could either go without liquidity or borrow from lenders charging interest rates and stock fees that substantially ate into the value of their shares. In a worst-case scenario faced by 46% of employees holding in-the money stock options, the employee’s options expire worthless due to their inability to exercise.3 The addition of Option Exercise Loans to the Collective suite of wealth management solutions solves this problem by providing loans to fund the exercise price.
Another benefit for employees from the new loan program is that instead of having to assemble a patchwork of different service providers to address their different option exercise, risk management, liquidity and investment needs, the Option Exercise Loans are bundled with Collective products into a single, seamlessly integrated solution immediately available over the Collective website. Collective’s Customer Service Representatives are also always available to talk employees through their alternatives and customize a solution meeting their financial needs.
Collective’s CEO and Co-Founder, Greg Brogger, said, “With the launch of Option Exercise Loan program, it is much easier for customers to obtain liquidity for the options they worked so hard to earn and we’re even more excited to be able to do it without charging them interest or stock fees.”
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1 Option Exercise Loans will charge 0% in interest and a 2.5% loan origination fee.
2 Loans subject to credit approval; terms and conditions apply. Minimum loan amount is $5,000; maximum loan amount is $350,000. A 2.5% origination fee applies and is deducted from the loan proceeds. For example: A loan amount of $75,000 with a 2.5% origination fee and a 2 month loan term, will result in an APR of 15% and 1 single payment of $75,000, due on the maturity date of the loan, which can be made directly from an Exchange Loan. Actual loan duration and related APR may vary.
3 See “2022 Employee Stock Options Report,” February 6, 2023, Ann Hodge and Peter Walker for Carta.
ABOUT COLLECTIVE LIQUIDITY
Collective Liquidity provides unicorn shareholders with the financial tools and products they need to effectively manage their wealth. Collective’s wealth management solutions enable diversification, liquidity and wealth creation over the long term, generating dramatically better financial outcomes for Collective’s clients.
Media contact
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