Securities-Based Borrowing for Individuals
Access the Liquidity You Need Without Disrupting Your Long-Term Investment Strategy
Securities-based borrowing lets you use eligible securities as collateral, so you can get money you need today without disrupting your investment portfolio. You can choose from different lines of credit to access funds for practically any purpose. As long as your account has sufficient eligible securities to use as collateral, this type of credit line may be easier to obtain and potentially more cost-effective than other alternatives.
The risks of securities-based borrowing include:
- Market fluctuations that may cause the value of pledged assets to decline
- A decline in the value of your securities that could result in selling your securities to maintain equity
- Adverse tax consequences as a result of selling securities1
Borrowing for a Range of Needs
Securities-based borrowing adds flexibility to your personal and business finances without disrupting your long-term investment strategy. How you use these credit solutions is as unique as you.
Some of the most common uses include:
- Unexpected expenses
- Home renovations
- Real estate purchase2
- Tax bills
- Debt consolidation
- Business opportunity
Speak with your B. Riley Wealth Management financial advisor to determine if a securities-based borrowing strategy may be right for you.
| You Have Access to the Following Alternatives: | ||||
|---|---|---|---|---|
| Margin Account | Enhanced Non-Purpose Loan |
Secured PrimeLine® Line of Credit |
Custom Loans | |
| Product description | A convenient financing source to pursue investment opportunities or to meet other personal financing goals offered through First Clearing†. |
A line of credit backed by eligible securities offered through First Clearing†. |
A line of credit backed by your eligible securities offered through Wells Fargo Bank. |
Customized loans or lines of credit with flexible advance rates and terms offered through Wells Fargo Bank. |
| Borrowing needs | Any amount | Any amount; generally for $100,000 to $1 million |
$250,000 minimum; generally for $500,000 to $5 million |
$1 million minimum; generally for $5 million and up |
| Fund access | Check, check card, and wire transfer4 |
Check, online, ACH, and wire transfer |
Check, online transfer, and wire transfer |
Wire transfer |
| Uses | Anything including to purchase securities |
Anything except to purchase securities or pay down margin |
Anything except to purchase securities or pay down margin |
Anything except to purchase securities or pay down margin |
| Typical loan-to-value | 50% – 90% based on asset class |
60% – 90% based on asset class |
50% – 95% based on asset class and underwriting option |
50% – 95% based on asset class |
| Term | No set expiration | No set expiration | 60 months | Varies |
| Interest rate index | Varies | Varies | Wells Fargo Bank’s Prime rate or LIBOR |
Wells Fargo Bank’s Prime rate or LIBOR |
| Payment required | No minimum monthly interest payment required |
No minimum monthly interest payment required |
Monthly interest only | Monthly interest only |
| Underwriting requirement | Collateral review | Collateral review | Collateral and borrower review |
Collateral and borrower review |
1B. Riley Wealth Management, Wells Fargo & Company and its affiliates are not tax or legal advisors.
2Financing real estate with a securities-based line of credit carries risk and may not be appropriate for your needs. A complete assessment of your circumstances is needed to help you determine which type of loan provides the best fit. All loans are subject to credit approval. Wells Fargo & Company and its affiliates do not provide tax or legal advice. Please consult your tax or legal advisors to determine how any credit may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
3Subject to minimum equity requirements
4Command checks and debit cards are only available through the Command Asset Program. Margin borrowing may not be suitable for all investors. When you use margin, you are subject to a high degree of risk. Market conditions can magnify any potential for loss. The value of the securities you hold in your account, which will fluctuate, must be maintained above a minimum value in order for the loan to remain in good standing. If it is not, you will be required to deposit additional securities and/or cash in the account or securities in the account may be sold. Please carefully review the margin agreement, which explains the terms and conditions of the margin account, including how the interest on the loan is calculated.
Secured PrimeLine, Secured Term Loan, and Custom Line of Credit lines of credit are offered by Wells Fargo Bank, N.A. (member FDIC), a banking affiliate of Wells Fargo & Company.
Securities-based lending has special risks and is not suitable for everyone. If the market value of your pledged securities declines below required levels, you may be required to pay down your loan or line of credit or pledge additional eligible securities in order to maintain it, or the lender may require the sale of some or all of your pledged securities. The sale of your pledged securities may cause you to suffer adverse tax consequences. You should discuss the tax implications of pledging securities as collateral with your tax advisor. Wells Fargo & Company and its affiliates are not tax or legal advisors. All securities and accounts are subject to eligibility requirements. Please read all lines of credit documents carefully. The proceeds from some asset-backed line of credit may not be used to purchase additional securities or pay down margin. Securities held in a retirement account cannot be used as collateral to obtain a loan. Securities purchased in the pledge account must meet collateral eligibility requirements. Other account fees, fund expenses, brokerage commissions, and service fees may apply.
| Investment and Insurance Products: | ► NOT FDIC Insured | ► NO Bank Guarantee | ► MAY Lose Value |
†Brokerage account(s) carried by First Clearing. First Clearing is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. © 2011-2016 Wells Fargo Clearing Services, LLC. All rights reserved. 0116-00655.
