Non-Marketable Securities
What does it mean
Non-Marketable Securities encompasses all investments that are not readily sellable on an open market. An example of these Non-Marketable Securities would be ownership in a small business.
Why does it matter
Knowing what this term matters because in many cases, this item will be one of the largest item on a business owner’s personal financial statement. This is especially important for a banker to understand because most Non-Marketable Securities will show up on a business owner’ personal financial statement, and many times this individual is a guarantor on the bank loan to this same small business. The ultimate goal of a guarantor is to provide an outside source of repayment if the business is unable to repay its loan. With that in mind, we turn our attention to the owner’s Non-Marketable Securities. In most circumstances, this value is the small business the owner is personal guaranteeing loans for. When that is the case, that value should effectively be omitted from your analysis because that value is present when the business is operating well, but if you are at the point of needing the guarantor to step it, it means the business is not operating well, and that value is likely gone. Understanding what Non-Marketable Securities will allow you to have a more clear picture of the value your guarantor brings to the table.
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Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
