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Securities-Backed Line of Credit

A Securities-Backed Line of Credit (SBLOC) lets you access the value of your investment portfolio without incurring tax consequences or resorting to credit cards. Whether you are seeking funds for a real estate purchase, tax bill, tuition payment – anything except the purchase of additional securities – a Securities-Backed Line of Credit is ready when you are, while your investments remain untouched to maintain your carefully crafted investment strategy.

FLEXIBILITY
Whatever the financial need, a Securities-Backed Line of Credit provides you with access to funds without disrupting your investments, investment strategies or asset allocations, and without creating unexpected tax consequences.  Consult with your financial professional as liquidating securities may result in tax implications for you.  

CONVENIENCE
Access your new Securities-Backed Line of Credit with personalized checks or free domestic wire transfers any time you need funds.

CONTROL
Obtain information about your Securities-Backed Line of Credit on our website, 24 hours a day, 7 days a week.

LOAN STRUCTURE
Loans issued under this program are lines of credit collateralized by a portfolio of eligible securities - stocks, bonds, mutual funds. The loan term is perpetual. The borrower is billed for interest on a monthly basis. Payments against principal may be made at any time at your discretion.

INTEREST RATES*
Securities-Backed Line of Credit originated prior to August 22, 2016 feature a tiered interest rate structure determined by the outstanding principal loan balance. For a Securities-Backed Line of Credit originating on or after August 22, 2016, the interest rate will be based on the maximum drawing power of your loan (commitment amount) at the time of application. There is also a fixed rate option available. 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. There is no charge for the unused portion of the line of credit

CREDIT LIMITS*
Credit limits are based upon the quantity and type of underlying collateral. Please note that qualified assets are not eligible collateral. Securities that meet certain quality standards are readily marketable and that are publicly traded qualify as acceptable collateral; however, not all securities meet these standards (please contact Advisor Bank or your investment advisor for specific details).  The credit limit is determined by multiplying the acceptable collateral value by the “advance rate” associated with the individual security or mutual fund’s asset class. Lines backed by portfolios allocated across asset classes will be segmented with the appropriate advance rate assigned to each asset class. The line of credit is subject to credit approval.

ASSET CLASS

ADVANCE RATE

Cash and Equivalents

100%

US Treasury Instruments 

90%

Investment-Grade Municipal & Corporate Bonds

80%

Non-Investment Grade Municipal & Corporate Bond Funds

50%

Equities

  50%

Special Notes- Asset class advance rates apply for both individual securities and pooled vehicles, like mutual funds and ETFs – with the exception of Non-Investment Grade Fixed Income, which are only acceptable as collateral when held within diversified mutual funds or ETFs. All Treasury, Municipal, and Corporate fixed income instruments are evaluated on Par Value. Finally, concentrated portfolio holdings are subject to reduced advance rate calculations at the discretion of The Bancorp.

*Note: Certain conditions apply:

  • The SBLOC minimum credit line is $75,000.
  • As with any lending product, there are risks associated with SBLOC borrowing, and this option may not be suitable for everyone.
  • Proceeds may not be used to purchase additional securities (or pay down margin which was used to purchase securities). 
  • Since each situation is unique, applicants are urged to consult their tax advisor or attorney regarding the legal and tax implications of using securities as collateral for a loan.
  • Loans are provided by The Bancorp Bank and are subject to collateral and credit approval.
  • The securities pledged as collateral are restricted. Approval is required for certain transactions.
  • Qualified assets are ineligible collateral.
  • The terms, loan structure and pricing of the Securities Back Line of Credit Program are subject to change upon The Bancorp Bank’s discretion.


The Bank may reduce the line of credit if, in its sole discretion, it determines that the value of the collateral is no longer sufficient.  For example, if market fluctuations produce a significant loss of value in the collateral account or if the reallocation of assets from an asset class with a higher advance rate (such as fixed-income) to one with a lower advance rate (such as equities) results in insufficient collateral value, the credit limit will be reduced accordingly or corrective action may be required such as 1) deposit additional eligible securities to the investment account, 2) repay a portion or all of the  loan outstanding balance or 3) forfeit shortfall in value of pledged assets to The Bancorp Bank. Every effort will be made to work with you and your advisor to determine the best resolution.

For more information or to determine if a Securities-Backed Line of Credit is appropriate for you, please contact a Advisor Bank representative or your investment advisor.