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Getting a Margin Loan Securing a margin loan can mean quick cash for startup, but it doesn't come without risk.

By Rosalind Resnick

Opinions expressed by Entrepreneur contributors are their own.

Question: I'm thinking about borrowing against my securities to open an art gallery. What are the pros and cons of using a margin loan to finance a business?

Answer: Unlike applying for a business loan from a bank, borrowing against your stocks, bonds and other securities can be a quick and easy way to get startup money. There is no business plan to present, no mountain of paperwork to fill out and no credit check to pass. Assuming that you have at least $2,000 in cash or securities in your account, your brokerage firm will typically lend you up to 50 percent of the value of most stocks, mutual funds and other widely traded securities at rates that are often lower than you'd pay for a loan from the bank. For example, if you own $100,000 worth of Microsoft, your broker will generally allow you to borrow $50,000 on margin. And the interest is usually tax deductible.

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