If your clients want to make a major purchase or a financial emergency arises, they might be tempted to dip into their investments—a move which, if repeated often or executed at the wrong time, could slow your clients’ progress toward their key financial objectives.
To help maintain their investment portfolio while meeting their cash needs, your clients may want to take advantage of a line of credit. Clients can use a securities-based line of credit for numerous reasons, including:
- Refinancing/consolidating existing debt
- Real estate or bridge financing
- Business and investment opportunities
- General liquidity in case of emergencies
- Personal uses, such as purchasing luxury items, funding tax liabilities or tuition expenses
RBC Credit Access Line
A fast and flexible credit solution to provide liquidity for clients. An RBC Credit Access Line, offered by Royal Bank of Canada, is a competitive variable- or fixed-rate line of credit that allows clients to borrow against their taxable investment portfolio.
This product is designed to meet the needs of clients who may need short-term portfolio liquidity. The online application and approval process takes as little as three business days.
There are no fees to set up, maintain or cancel. And there are no penalties if the client never uses it. Clients pay nothing until they advance money from their credit line.
Your clients can open a simplified, e-signature-driven account with a minimum line size of $75,000 and can draw as little as $1,000.
Once approved, clients can access funds quickly via an online portal. Loan repayment is easy. Since variable-rate terms are interest-only, this option gives clients flexibility on when they repay loan principal as long as their investment account continues to maintain or increase in overall lending value.
Similar to a margin loan, clients may be required to deposit cash or additional securities to maintain minimum equity requirements, should the lending value of assets securing the loan decline in value. If clients are unable to maintain minimum equity requirements, securities pledged as loan collateral may be sold without prior notice.
Clients should understand these and other risks associated with securities-based lending before using RBC Credit Access Line as a credit solution.
Advanced technology to help support this solution
Use RBC CreditLink to help simplify the credit process into three easy steps:
CreditLink also provides transparency in the application process, as well as when the line is live, to provide a better servicing experience for you and your clients.
RBC Credit Access Line is a securities-based, demand line of credit offered by Royal Bank of Canada, an Equal Opportunity Lender and a bank affiliate of RBC Capital Markets, LLC. Subject to credit approval. Securities-based loans involve special risks and are not suitable for everyone. You should review the provisions of the RBC Credit Access Line agreement and related disclosures, and consult with your own independent tax and legal advisors about any questions you have prior to using RBC Credit Access Line. Considerations should be given to loan requirements, portfolio composition and diversification, time horizon, risk tolerance, portfolio performance expectations, and individual tax situations.
There are important risks associated with securities-based loans that you should consider:
- You will be required to deposit additional cash or securities, or pay down the line of credit, should the value of your securities decline below the percentage equity you must maintain or the percentage equity you must maintain increase. During a market downturn in which the securities in your portfolio decline in value, the percentage equity you must maintain will cause your losses to be greater than if there were no loan against your portfolio. Your losses can exceed your original collateral amount.
- You are not entitled to an extension of time to satisfy equity percentage requirements.
- Should you be unable to maintain the required percentage equity, some or all of your securities may be sold without prior notice to you. In the event of such a sale, you will not be entitled to choose which securities are sold, your long-term investment strategy may be interrupted and you will be responsible for all resulting fees and tax consequences.
- Royal Bank of Canada may increase equity percentage requirements at any time without prior notice to you and may require you to pay down your line of credit, in part or in full, at any time and for any or no reason.
- The rates, terms and conditions of your RBC Credit Access Line are subject to change in accordance with the terms of the RBC Credit Access Line agreement.
- Should the rate of your RBC Credit Access Line be set to float against an index, you will be subject to greater interest costs in a rising interest rate environment.
RBC Credit Access Line is a non-purpose facility. The proceeds of an RBC Credit Access Line may not be used to purchase, trade, or carry margin stock or repay a margin debt that was used to purchase, trade, or carry margin stock. Royal Bank of Canada may demand repayment of all proceeds of RBC Credit Access Line advances that it has reasonable basis to believe were used to purchase or carry margin stock.
RBC Clearing & Custody is not a bank. Where appropriate, RBC Capital Markets, LLC has entered into arrangements with the Royal Bank of Canada to help facilitate and service your RBC Credit Access Line. RBC Capital Markets, LLC and its affiliates and their employees do not provide tax or legal advice.