Answers to common questions
A LeverageLine is a custom, personalized credit line that uses your stocks, bonds, mutual funds or any other publicly traded non-IRA securities as a simple asset guarantee for a very competitive credit line designed especially for the real estate investor or franchise/business acquirer (though it may be used for any legal purpose other than the purchase of more marginable securities). It is not a margin loan, which is designed for single stock positions, caps at 50% loan-to-value, and comes with high interest plus other conditions not present with a LeverageLine asset-based line.
A. B. Nicholas has arranged this facility for its client via several top-tier institutions and carefully selected executive advisors within each institution who are willing to provide the LeverageLine model of no-lender-side-mandatory-fee system, no sale of securities to fund, and full appropriate licensure plus immaculate FINRA records, all of which are not normally a part of the typical retail brokerage or banking relationship. Read up on this gold standard LeverageLine program.
Your collateral stock portfolio requirements: all securities within your portfolio should have a cumulative value of at least U. S. $85,000 at the time you apply, and cannot be inside an IRA or 401k. The collateral securities should be trading at $5/share or higher consistently over at least a year. As a rule, multi-stock portfolios are always preferred, but not required. Your securities should be free-trading, and if you have a margin loan on them already, your lender can pay this off for you in advance and roll them into a new, higher-LTV, lower-interest LeverageLine. .
You may use any combination of stocks, bonds, mutual funds, cash, or other eligible securities. You may not use real estate as collateral, although you may use the proceeds of your LeverageLine for real estate investment if you wish. You may ot buy additional marginable securities (e.g., stocks) with the proceeds of your LeverageLine.
We cannot use IRAs or Keogh Plans for our securities credit line, but we do have a retirement rollover program that can free cash for investment in a business or franchise. Please inquire if this is of interest.
In some cases pre-IPO stock can be used as collateral too, and LeverageLine can be cross-collateralized with other assets such as real estate for a special LeverageLine construction. However, we cannot take private or restricted stock at any time. Inquire if you have questions.
One of three major, well-known, fully licensed, SIPC/FINRA, American brokerage-banking giants. Our current partner institutions have all agreed to provide the LeverageLine credit line model of wholesale securities financing in the manner we have requested. We do not work with unlicensed lending partners nor any individual or institutional with derogatory FINRA records.
Likewise, we also partner within those institutions only with carefully selected, licensed, experienced individuals with flawless FINRA records and licensing in all U. S. states where we accept applicants.
These institutional lender-advisors have agreed to provide the wholesale LeverageLine model of securities credit line financing to our ABN clients exclusively..
All advisors within these institutions are top-notch professionals with many years of experience particularly in the franchise, business-buying, and commercial real estate areas. All are licensed Certified Financial Planners and/or Registered Investment Advisers in perfect standing, with unblemished FINRA-documented backgrounds. (Quickly confirmable online at www.finra.org.)
However, even this is not enough to become an A. B. Nicholas lending partner. The registered and licensed advisers within these institutions must also have extensive “people experience” vis franchise and commercial real estate clients. They must understand the specific needs of these types of borrowers, not just presently, but for the future development and planning of their business aspirations. This is one of the main reasons that A. B. Nicholas is the number one provider of securities finance niche marketing to the franchise and business markets.
Finally, to make the grade out of the many advisors who seek to become A. B. Nicholas lending partners, they must have an excellent, patient, no-pressure “listener approach” to the needs of each ABN client with top-notch personal management of every credit line account. Nothing less will do. Our advisers all take the time necessary to go over every detail of the program and answer questions in real time. Our goal is your satisfaction.
No. A. B. Nicholas in designing this lending facility has required that its clients have no mandatory account management fees as a precondition to funding; this is a fundamental feature of our program. Our clients come primarily looking for loans, not ancillary services, so none are required.
This can be a significant savings to our clients, as mangagment fees can range as high as 3% per annum depending on the program and institutions. A. B. Nicholas clients pay zero in fees to their lender, unless they choose additional services or professional account management. If so, our lenders offer deep discounts on those services since you’ve come in as an ABN customer.
Three ways: Apply through a link provided by your A. B. Nicholas Agent; or via our secure application form.
Your term sheet is delivered electronically via a secure, Verisign/Echosign system which allows downloading of a PDF copy and signing with two clicks.
View our Process page for more detailed information on our easy, secure application procedures.
We only accept applications via this secure application form. We do not accept applications by email, fax, or over the phone.
Yes, but it is not a margin loan. Your LeverageLine securities credit line is callable; in practice, however, this has been historically infrequent because your lender always analyzes your portfolio and sets your loan-to-value very carefully based on its price history using sophisticated modeling programs available only to major institutions. Still, a call to shore up value, pay down your line, or restructure out of disproportionately-represented (in a multi-stock portfolio) falling-priced stocks, even if historically rare, can happen as with any stock transaction.
Your lender has taken steps to minimize that risk to the extent possible, and it begins with an analysis of your holdings by the professional risk department of your licensed lending institution before your term sheet is generated. Every stock in the portfolio is carefullly analyzed and weighted for risk, which is reflecgted in the loan-to-value of each stock, before averaging all of your securities’ LTVs together. This means that one falling stock need not necessarily affect the overall collateral value if other stocks are offsetting it (the average of all the securities decide the value for maintenance purposes.)
This is different from margin loans, which are capped at 50% LTV for single stocks and normally not averaged together in the portfolio. They deal with only one stock at a time – not a basket of averaged securities as with LeverageLine — making a drop in value a much bigger risk with fewer avenues for remedy if the prices of that one stock should fall precipitously.
— Your lender offers this as a relationship-oriented credit facility that includes a client-supportive call policy; the last thing he wants is to lose your business.
— Your securities are carefully analyzed for strength and eligibility by your lending institution before your quote is delivered, ensuring maximum possible accuracy.
— Your loan-to-value is set at a point that the lending institution believes it to be of reasonable risk; the last thing your lending brokerage wants is a call, since they seek a long-term financial relationship with each client.
Our record of only a few calls over many thousands of LeverageLines (and each of them easily and happily resolved with some minor restructuring of the portfolio) begins with the qualifying securities and the expertise of our personnel
Your licensed lender advisor keeps an eye on all securities credit line accounts and remains in close communication with you at all times to assist if needed. Client satisfaction is critical at A. B. Nicholas.
Yes, you can have both an SBA loan and a stock secured loan like LeverageLine as far as your LeverageLine lender is concerned. You can take out a LeverageLine using your securities as guarantee first if you wish, and a lien is then placed against those securities by your lender. When applying for an SBA loan you will of course list your securities as your assets, though you will need to disclose that they are already guaranteeing other financing which may or may not affect your SBA loan offer. Only one lien on these assets is possible at a time.
This program has been designed for the franchise, business and commercial real estate investor, so it can also work well with many different financing programs as a supplement. It offers speed, security, and very low rates which can help bring overall costs down if merged with other bank financing. . Have the extra cash you need, when you need it, or use your LeverageLine as a downpayment. The choice is yours.
Your carefully selected licensed lender adviser is experienced and easy to work with; he/she will always aim to meet your specific requirements and special conditions if they arise.
A term sheet is detailed explanation of your credit line offer and a guaranteed offer to finance in the amounts an under the terms therein. The “meat” of the term sheet is provided t A. B. Nicholas, which prepares your term sheet, by your licensed lending institution. It is based on the information that you provided on your initial LeverageLine application, principally your brokerage statement.
Application for your quote is through a heavily encrypted, secure site with a lockbox style, password protected area for your lending institution’s use only. (View the application form). Once a quote is delivered to A. B. Nicholas via this system, the documents in the secure area are purged and overwritten for added client protection.
Your quote spells out your estimated credit line offer; once delivered, we are available to speak with you directly to go over the term sheet, confirm your lending institution, and confirm your exact offer. We also help you with any other questions you may have about your lender adviser or time to funding and so forth. The term sheet includes compliance and privacy disclosures which we ask you to read and to which you must agree.
Signing the term sheet is an easy, fully digital (Verisign/Echosign) process based on industry-standard DoD-level security which allows you to sign off with just two clicks. Clients automatically receive a signed PDF copy upon completion, and are from that point ready to receive a Welcome email or call from their licensed lender adviser at their lending institution. The Welcome email includes all account-opening documents for review, the adviser’s FINRA CRD and licensing credentials (which are also on your term sheet), and the adviser’s contact information for background checking prior to the introductory conference call.
All default LeverageLine interest rates are variable rates, based on a discounted “house” rate (an institution-determined figure based on various risk and economic indicators including size/value of your portfolio); and a small increment based on 30-day (monthly) LIBOR. (See the 30-day LIBOR rate on any of the major financial sites, including Bloomberg or Bankrate)
You may also opt for fixed rate financing if you wish, although the rate is usually higher. Inquire if this is of interest.
No. You will not be required to give up the ownership of your securities in any manner, or to sell your securities, as a precondition to funding,
That said, obviously if you should default on your loan and make no attempt at acceptable repayment arrangements, the lending institution will have the right to sell sufficient securities to cover its loss of principal.
With your permission the securities you wish to use as collateral will move electronically to your solely-owned, new account at your lending institution. An account is opened for you at your lending institution. The account is no different from an account at any modern U. S. brokerage (SIPC-insured, online access, reports on demand – all standard).
With your permission, those securities that you wish to use to back your credit line will move to your new account electronically, institution-to-institution (“ACAT”) — a common practice among large brokerages and banks. At all times your securities remain yours alone, in your account onlyat your new licensed lending institution. The lending institution will only exercise any rights in the most extreme cases of default and no resolution, at which time you may be compelled to sell enough shares to make your lender whole.
If your securities portfolio grows in value over time, the maximum credit that you may draw from the line will increase along with it. You may request an increase in draw/line release if your portfolio should show the requisite consistent/stable increase. Minor for temporary price increases will not affect the overall loan authorization.
Although the increase is not automatic, if the portfolio as a whole shows recognizable growth over time (not just a short-term or temporary flux), your higher credit authorization is likely to be approved. Simply contact your licensed lender advisor to request an increase.
When you have an unusual or non-standard situation – perhaps securities that trade freely but have some unusual or limiting conditions upon them – we can often find a solution. However, we cannot take 144 Restricted stock, or stock held privately (as opposed to trading freely on a major market like the New York Stock Exchange). We do offer a credit line facility for UPREIT investors, however.
You are always welcome to join us if you have an existing network of potential clients and a 100% clean legal background in finance, real estate, business capital formation, or a related field that interfaces with potential LeverageLine clients. Agents must comply with ABN and lending institution rules, but are free to refer clients into the program. (See more here). A robust and very secure clickthrough service and information system is available, too to assist agents. For organizations, webinar training sessions are also freely available.
— are single-stock based for call purposes
— are often more expensive
— do not allow deduction of your line’s interest paid against business income*
— cap at only 50% loan-to-value for equities (stocks), and
— have very strict call policies.
In addition, margin loans — known as “purpose credit loans” — are intended primarily for the purchase of more marginable stock, not for other purposes.
Margin loans are “purpose” credit loans by definition, designed for the purchase of additional securities as their main purpose. The maximum loan-to-value is 50% for stock portfolio use and they are designed for the purpose of leveraging your brokerage’s cash into additional securities and thereby to increase your opportunity to profit from their appreciation by deploying more buying power.
LeverageLines, by contrast:
— are multi-stock-based and averaged to reduce risk for call purposes
— are far less expensive
— may allow deduction of your line’s interest paid against business income*
— have no set loan-to-value cap for stocks or other securities
— have very client-oriented call policies with multiple cure options
LeverageLine is a “non-purpose” securities portfolio-based credit line (stock loan) that is intended for any purpose other than the buying of more marginal stock and there is no cap on how high the loan-to-value can go. Our ABN LeverageLine is a wholesale facility customized for the franchise, business acquisition, and commercial real estate investor with many features designed to benefit these markets that do not exist with margin loans.
A LeverageLine is therefore cheaper, faster, more feature-rich, more flexible, and tailored to the long-term needs of the specific markets we serve. It is the end result of a rigorous process of locating licensed advisors within major licensed institutions willing to offer the no-title-transfer, no-sale-to-fund model that our specific type of client requires.
Our lenders, in addition to understanding our clients’ specific needs, hope that a certain percentage of our clients might later opt for other financial services, such as conventional business credit lending or other traditional brokerage services which are not required with LeverageLine. They will not, however, “hard sell” our clients under any circumstances.
*Do not undertake any tax decision without consulting a licensed tax professional in advance.
Stocks, bonds, mutual funds, ETFs, non-corporate bonds, and most other unrestricted securities trading on any major U. S. exchange at $5 a share or higher.
We can also provide financing against selected pre-IPO stock with proper registration. For cross-collateral transactions, eligible securities plus real estate, or selected high net worth assets may be grouped into a single credit line, but this would be the exception to our secuerities-as-collateral only business model.
Note Please Both pre-IPO and cross-collateralized transactions are handled on a case-by-case basis. Inquire or call us (202.379.4744) first before applying.
We do not accept medium-term-notes (MTNs), letters of credit, foreign bonds, real estate/mortgage-based bonds, or securities that are in an IRA, 401K or Keogh plan as collateral for the LeverageLine program.
For more information on securities requirements, please visit our eligibility page.
Yes. For LeverageLine clients you are unlikely to notice anything different between your existing brokerage and your new lending brokerage accounts, including online access, research tools, and reports on demand.
You are basically simply changing your custodial account for the sake of obtaining superior custom wholesale LeverageLine. Our partners offer higher-end online trading tools as well if you wish.
No. There is no penalty for early payoff, and you have no requirement to keep your credit line in place if you own nothing on your line.
Our standard LeverageLine is a revolving line of credit and you may prepay (pay off) your outstanding principal any time you like with no penalty of any kind if your account is in good standing. You may also pay it down by any incremental amount at any time. If your securities generate substantial dividends, you can direct these dividends to count against any accrued interest or principal if you wish.
Note that you are not charged anything by your lending institution if your balance is zero. All wires are free as of 11/26/2018.
A. B. Nicholas developed this particular custom facility at great expense and time, and we charge a fee based on the maximum line we will have delivered, as promised, to you. This fee is due only after your line of credit is open to your satisfaction; in other words, when we have delivered as stated. Clients who would like a discount on this fee may opt to pay before their term sheet expiration date for a 10% discount. Both options are clearly stated on your term sheet.
For fee-related questions, please write us at email@example.com or call Marie Wood, Operations Manager, at 202.379.4744 Ext. 2.
Yes. You receive a 10% discount on your fees if you choose to pay the fee before your term sheet expires, which is approximately 5 business days after deliver of the term sheet to you. This is entirely optional.
We welcome your calls or emails at any time; you may also use the chat button at the bottom of each page. If you reach us after business hours, we will get back to you promptly on the next business day.
You can reach us between 9AM and 8PM Eastern time, Monday through Friday, and 10AM to 1PM Saturday at 202-379-4744 ext. 1 (ext 2 for administrative matters); or via our secure contact form at any time. We respond to all inquiries promptly.
Organizations that would like to be partnered with A. B. Nicholas can contact us at the above coordinates. (View our partner page).
If you have questions, we're here with answers
Get more information about our stock secured loan programs by sending us a message. You can also contact our live support during normal business hours: M-F 8AM-6PM.