fbpx

The Role of Cash in a Securities-Based Line of Credit

A better stock loan... built by YOU.

Many of our clients come to us with a mix of securities and cash. On some occasions, they come to us with all cash. This is perfectly fine, of course, but it is important that they understand the mechanics of using cash for a LeverageLine.

The most important rule — and the one likely to cause the most misunderstanding — is that with a LeverageLine, we are not looking at the cash in a brokerage or bank account as part of the client’s “overall net worth” as might be the case with a mortgage or conventional loan, but rather as the collateral itself.

Put differently, the client is deploying their cash as collateral for the loan by having it converted to a money market fund, a CD, a stock, a bond, or another acceptable security or securities, usually. But clients may also opt to simply keep it in a money market fund earning interest — and still use it as part of their overall collateral, if desired. The licensed lending institution and adviser will work with each client depending on the client’s priorities and wishes when cash is part of the collateral base. Once turned into a lendable asset, it is treated just like any security for LeverageLine.

Please be sure your clients know that we will assume any bank statement sent will be sent to us because they wish to use it as part of their collateral for a LeverageLine. When used in this way (as collateral) it of course is no longer accessible for paying for other things without diminishing the collateral value.

Feel free to call 202.379.4744 Ext. 1 if you need more information on this subject; or contact us here.

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Related Posts

Have Us Speak to Your Salesforce about LeverageLine Credit Lines for Stock Portfolio Owners.

We offer what is arguably the best stock loan program in the U. S. market today, with the lowest rates and highest loan-to-value plus quickest delivery of funds in the nation for a 100% secure, licensed, FINRA-member-managed program. We are A. B. Nicholas, and securities finance is what we do and have done exclusively for over a decade. We have three major household-name licensed institutional brokerages who have agreed to

Why an A. B. Nicholas Stock Loan and Not One from Your Current Brokerage?

When it comes to money, there is a reason why so many financial institutions have named themselves with words like “Trust”, “Fidelity” or “Assurance” for example. That’s because outside perhaps of the medical profession, nowhere else in human life is trust and confidence in the efficacy, honesty, and integrity of a company (or individual) more important.  This applies to stocks, bonds, mutual funds, and so forth too. It is also

A Stock Loan Against Your Cannabis Stock Portfolio? Yep, We Can…

If you have been an investor in one of the many cannabis-related stocks that have sprung up on the boards over the past several years, you’ve probably been stymied when it came to taking out a margin loan against them. Because of the still-existing federal treatment of marijuana as a drug, major banks and brokerages have been unwilling or unable to provide the normal lending facilities against these stocks that

Join Our Weekly Newsletter

We do not sell, communicate or divulge your information to any third-parties.