That small businesses across the country have felt unprecedented pain during the pandemic of 2020 cannot be overstated. Even “essential” businesses like Transmission repair shops are, at least, experiencing the trickledown effects of supply chain interruptions and added operating costs.
According to a recent Forbes Magazine article, 38% of small businesses are not confident about their futures. Nevertheless, Dave Kunz wrote in an ABC-7 article, “Auto repair shops and car dealership service departments are changing procedures amid the COVID-19 pandemic. The entire auto industry is feeling negative effects due to the lack of sales.”
However, many economists feel that there is hope on the horizon. In a recent Fox News interview, JP Morgan economist, Anthony Chan, said that 2021 would be a good year for the stock markets and small businesses. Contributing factors include the vaccine, low-interest rates, and improving consumer confidence.
Still, there is a disconnect between main street and wall street. As the Dow Jones industrial average hit a record high of 30,045.48 on Nov. 24, 2020, Fortune Magazine reported that nearly 100,000 establishments have shut down. It’s apparent many of the people on “Main Street” are being left out of the Wall Street comeback.
As a small business owner or investor, how can you prepare to participate in the 2021 economic expansion? The answer for you could be “security-based lending.” Security-based lending allows you to stay invested and earn additional money through a line of credit secured by your investment portfolio.
Like a home equity line of credit, investors can attach a credit line on their investments as one would a home or other real estate. So, if you have assets working for you in the market and need liquidity, subject to underwriting, an investment firm like empiriKal partners© can offer you a secured line of credit up to 80% of the portfolio value.
There are three attractive benefits to incorporating a security-based line of credit into your investment strategy.
The credit line provides needed cash to operate and even grow your business during a crisis like COVID-19. Rather than being one of the statistics, why not seize the opportunity to scoop up more market share?
This strategy provides low-cost funds, allowing you to participate in the post-crisis economy. Even though we expect higher growth in the equity market in 2021, a moderate, diversified, balanced portfolio can potentially yield an average of 6 to 7 percent. By utilizing cash from a credit line costing around 3 percent, you enjoy any returns greater than your cost of funds.
According to accountant and empiriKal partners© advisor, Kevin Lin, credit line interest can potentially offset otherwise taxable gains in the portfolio. Consult your tax advisor regarding this and other possible tax-saving benefits.
If you want to get in on the 2021 post-pandemic opportunities, rather than liquidating all or part of your investment portfolio, let us help you. With a security-based line of credit, you can continue to grow your net worth while protecting and expanding your business. Please feel free to reach out to me at empirKalpartners.com for an individual assessment.
Edward Vela is an Investment Advisor and the Estate Planning Specialist at empiriKal partners, llc ©, with 13 years of wealth management experience. He earned a Journalism Certification from the University of Massachusetts, a BA in Political Science, a Financial Planning Certification at UCLA, and an Executive MBA from the UCLA Anderson School of Management. You can contact Edward at 925-300-8805 or email to edward@empiriKalpartners.com.
Eric Harding is the founder of empiriKal partners, llc ©. As a graduate of Hillsdale College, Eric established the firm as an independent Registered Investment Advisor (RIA) based on Hillsdale’s four pillars – Freedom, Learning, Faith, and Character.
While some investment advisors fixate primarily on market fundamentals, Eric’s team looks through a geopolitical lens, finding opportunities that others might miss.
Edward Vela is an Investment Advisor and the Estate Planning Specialist at empiriKal partners, llc ©. with 13 years of wealth management experience. He earned a Journalism certification from the University of Massachusetts as well as a BA in Political Science and a certification in Financial Planning at UCLA. In June of 2020, he graduated from the UCLA Anderson School of Management with an Executive MBA.