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Securities-Backed Line of Credit (SBLOC)

How do I apply for an SBLOC?

You will need to contact your Financial Advisor for an application and submit it through him/her. The application gathers personal, income, and loan request information. The application is received by a member of the SBLOC Service Team who will process the request and review the collateral connected with the loan. If the SBLOC Service Team member needs additional information, he or she will contact you, either by a telephone call or an e-mail.

What happens once my SBLOC application is approved?

Loan documents will be prepared and sent to you or your advisor in the mail. It is important that you sign and return these documents promptly. 

How do I access my SBLOC?

When Advisor Bank receives your loan documents, they will be reviewed to make sure they are complete. After the review, the SBLOC will be made available for you to access via wire or check.

How is my interest rate determined?

The SBLOC features a tiered interest rate structure. The tiers reflect a margin either above, equal to or below the Prime Rate as published in the Wall Street Journal. The rate will change on a periodic basis to reflect changes in the Prime Rate and is subject to change at any time.

Does my SBLOC have a maturity date?

There is no set maturity date, but you can repay at any time without penalty.

How often do I pay interest?

You will be billed monthly for the interest.

Are there any fees to have the line in place?

There are no maintenance or annual fees associated with the SBLOC* and you will only be billed interest for the portion of the line of credit that is in use.

*Please refer to the Schedule of Fee for return payment charges and fees for international wire transfers.

Is trading permitted within the investment account being used as collateral for the line?

Yes; however, major changes in the asset allocation of the investment account might reduce the amount available to borrow against the line of credit.

What can I use my SBLOC to purchase?

Your SBLOC can be utilized for a wide range of needs and ensures your carefully constructed portfolio continues to grow. Use your SBLOC in place of other lending options for financing needs such as:

  • Real estate investments or purchase
  • Luxury purchases
  • Home improvements
  • Insurance premiums
  • Business investment, expansion or working capital
  • Tax payments
  • Tuition
  • Debt consolidation
  • Unforeseen expenditures
  • Any expense that is NOT directly or indirectly to purchase or carry margin stock or to repay indebtedness for such purpose.

What would cause the credit limit on my SBLOC to be reduced?

The credit limit will be automatically reduced if the borrowing power or “Advance Rate” value of your pledged securities no longer supports the approved credit limit. It is important that you verify your current credit limit and available credit before requesting advances or writing checks, as there will be no specific notice when the credit limit changes.

What happens when my securities go down in value?

Depending on the relation between your account value, credit limit and amount borrowed, collateral devaluations may: 1) have no consequence; 2) limit your access to funds; 3) require a deposit of additional assets or an immediate payment.

In the event that the value of the collateral falls significantly, Advisor Bank may contact you to request that additional funds be placed into the collateral account. If your credit limit has been reduced due to a change in collateral value, it will be increased as your securities gain in value.

Can I continue to get distributions while my account is pledged?

Generally, automatic distributions will be discontinued when the account is pledged and becomes the collateral for your SBLOC. In certain circumstances distributions may continue. Please contact your advisor for details.

I want to allow someone else to access my SBLOC. Can I do so?

Please call the Client Experience team at 800.650.5904 to discuss your request and determine what information is needed.

Can I continue to use my investment account check-writing privileges?

No; however, the SBLOC offers the newly established line of credit check-writing access.

Can a distribution be made from my investment account to make an interest or principal payment on my SBLOC?

Yes, you may use your investment account for the payment, provided there is sufficient value to support the transaction. Please contact your Financial Professional for details. 

How do I verify my credit limit and view information about my SBLOC?

You can access your account balance and transaction information by phone or online (log on to our website and navigate to “My Accounts”).

What if a security in the pledged investment account is no longer eligible to serve as collateral, or if while trading in the account, an ineligible security is purchased?

Ineligible securities are automatically excluded from your investment account for collateral valuation purposes, and your credit limit it adjusted accordingly. In certain circumstances, this could trigger a request for additional assets.

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