Q. Will the securities stay in my name?
A. Yes. The securities pledged stay in your name in your account.
Q. Will I continue to receive dividends?
A. Yes. If your pledged securities generate dividends they will be credited to your account.
Q. Who retains title to my securities during the loan term?
A. You do. The management account is in your name only.
Q. Are my securities sold at any time?
A. No. They are always your shares and they stay in your account.
Q. What if my account currently has a lien against it?
A. If your portfolio qualifies we can arrange to pay off the lien prior to the transfer of your account.
Q. What is the minimum and maximum loan amount?
A. The minimum loan amount is $100,000. The maximum loan amount is based on the loan to value of the
securities pledged. Note – We will not consider more securities to be pledged than the total of the three day
average volume of the securities to be pledged. For example you would like to pledge one thousand shares of a
security with a total three day average volume of 50,000 then only 50,000 shares may be pledged.
Q. What is the minimum share price for my stock to qualify for this program?
A. $5.00 share price for mutual funds and a $10.00 share price for equities. If the price of the shares is below that
amount please contact us for a alternative financing method.
Q. Will this loan be reported to any of the credit bureaus?
A. No, we do not access your credit history and the loan is not reported to the credit bureaus and there is no
public record of this loan. Should a default occur we would still not report the event to any credit reporting
Q. Are these Full-Recourse loans?
A. Limited recourse. Assets pledged can be liquidated to payoff the credit line.
Q. How are the loans repaid?
A. Monthly interest-only payments.
Q. What are my payment options?
A. Loan payment options are based upon interest-only monthly payments. We offer adjustable rates (based upon
the LIBOR) or you convert it to fixed rate loan at any time at no cost.
Q. Are fixed rates offered on these loans?
A. Yes. The loan may be converted at any time to a fixed rate payment at no cost. Fixed rates range from 3-8%
and will depend on the loan amount and term of the loan.
Q. Will I receive monthly statements on my account?
A. Yes, as with any large bank/investment firm your will receive monthly statements and you will have on-line
access to your account.
Q. What happens if I default on the loan?
A. These are non-personal recourse loans so the borrower has no personal liability. The securities are liquidated to
cover the shortfall. So you may loose part or all of your portfolio that was pledged.
Q. What is the penalty for pre-payment on the fixed rate product?
A. The fixed rate lines carry a breakage fee which only affects you if rates decline. This is not a major concern of
fixed rate borrowers. The fee depends upon how much the rate drops and how much time is left on the term of
the fixed rate.
Q. What is the term of the loan?
A. Loans are perpetual. The fixed rate loans are where the RATE is fixed for the term chosen by the borrower. 6
months to 7 years are available. At the end of the fixed rate term the borrower may convert to an adjustable rate
or continue with a fixed rate loan at the current offered rate.
Q. Is there a Yearly Maintenance Fee?
Q. How long will it take to set up this loan?
A. We can usually set it up and be able to draw funds on it in under 2 weeks.
Q. Will this program work with 401k’s or IRA’s?
A. No. However that may increase the household assets and as a result qualify the client for a better interest
Q. Can you lend against annuities?
A. Depending on the contract. We will evaluate these on a case by case basis.
Q. Is there a minimum trading volume per day on the securities to qualify?
A. Yes-a minimum average of $50,000 traded per day.
Q. In pledging CD’s how does that work?
A. CD’s must be obtained through our lender. They are not able to be transferred from your existing account.
Q. Are stocks the only collateral that may be pledged?
A. No, US and foreign equities, mutual funds, US Treasuries, restricted stock , foreign sovereign debt, corporate
bonds, municipal bonds, annuities and CD’s may also be pledged for this type of lending. What is the time frame
on access to the loan proceed? Typically funds are available in 1-2 days after the account has been opened and
the shares are transferred.
Q. Is this a “margin loan”?
Q. How is this loan program different from a “margin loan”?
A. Our revolving line of credit provides loan to values much higher than your typical margin loan program. Margin
loans have a higher loan to value call level and are full personal recourse. Most margin loan providers also will
check your credit.
Q. What is the Call point?
A. The borrower must maintain at 25% equity in the account at all times. If that amount falls below that point
then the borrower will be asked to add collateral.
Q. Once the funds are moved what restrictions are placed upon trading?
A. Some restrictions. If the client sells stock and buys fixed income for example, the credit line would in fact
Q. Is there a restriction on the use of the loan proceeds?
A. A borrower may do anything with the loan proceeds he choose except to purchase other securities
Q. Would this be classified as a taxable event?
A. This is a loan so typically it is not considered a taxable event. If in doubt consult your tax advisor.
Q. Who is the lender?
A. We work with a top-tier US Bank/Investment firm and all accounts are SIPC insured. Once we move along
further in the process you will be speaking with a ChFC officer of that bank.
Q. How long has the lender been in business?
A. For over 75 years.
Q. Why must I move my account from my current brokerage firm?
A. The lender requires that they are able to oversee the collateral. They are a top-tier US Bank/Investment firm
and all accounts are SIPC insured.