Securities Backed Line of Credit

 

A line of credit backed by securities held in an investment portfolio. This type of loan is similar in concept to a home equity loan, but rather than the loan being backed by the equity in your home, it is backed by the securities held in your investment portfolio.  

How it works: Whether you want to launch a new business, expand one you already have, or utilize a bridge loan, this type of funding can provide you with the immediate funds to do so by allowing you to access the value of your investment portfolio, without disrupting your long-term investments or asset allocations, or creating unexpected tax consequences.

ADVANTAGES:

  • Cash needs are satisfied without selling securities/assets/investments
  • Keep your long-term investment strategy in place, with all investments remaining in your name
  • Can keep all appreciation and dividends from your portfolio
  • Easier to obtain and have lower rates than other alternatives (SBA loan, unsecured loan, and other forms of credit)
  • Avoid selling stocks and generating capital gains
  • Typically receive approval within 48 hours and are fully funded within 10 days
  • Ability to borrow between 50-95% of investment portfolio

DISADVANTAGES:

  • Can be risky since market fluctuations could cause the value of pledged assets to decrease
  • If market value of pledged securities drops below certain levels, payment may be required, or you could be made to sell securities to maintain equity
  • Adverse tax consequences could result from selling securities

 

Learn More about Franchising

Franchising 101

“Owning a franchise allows you to go into business for yourself, but not by yourself.”
A franchise provides franchisees with a certain level of independence where they can operate their business.

Resources and Education

The International Franchise Association is committed to educating prospective franchisees on the dynamics of franchising and providing them with information to begin their evaluation of whether to become a franchisee. Beginning with the adoption in 1970 of the first franchise disclosure requirement in California.

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