Sound complex? It's simpler than you think.
Securities-based lines of credit allow borrowers to access cash without liquidating their investment portfolios. The portfolio serves as collateral—qualified equities, bonds or funds that are already owned. Principal can be re-paid at any time during the life of the loan—only interest is due monthly.
Borrower applies for a line of credit online.
Collateral is pledged with non-retirement assets.
Loan documents are reviewed and signed. That's it.
The Not-So-Fine Print
Size: From $75,000 to $25 million, with initial minimum draw requirements of $75,000 and subsequent draws starting at $2,500
Use: Any purpose other than purchasing or carrying margin stock
Facility Type: Revolving line of credit; clients can borrow, repay, and re-borrow multiple times
Collateral: Non-retirement investment assets, including stocks, bonds, mutual funds, and exchange-traded funds
Interest Rate: 1-month LIBOR plus a spread determined by loan amount, reset monthly
Repayment: Interest only, payable monthly; principal can be repaid at any time without penalty
Term: There is no maturity date; repayment can be demanded at any time
Fees: No application, origination, or annual fees
Documents: No personal financial statements, tax returns, or paper applications