Securities Backed Line Of Credit

Your SBLOC will not be impacted. You will still be allowed to keep the existing SBLOC open, to increase the size of the line of credit (if approved), to draw additional funds from the line of credit, to make payments, and to contact The Bancorp with questions.

All accounts are pledged at the legal account level (i.e., not the goal level). You may pledge a single legal account or multiple legal accounts to act as collateral for the same line of credit.

Normally, if you have an outstanding SBLOC balance, you will be blocked from transferring your funds out of Betterment to another provider. You must either pay off the SBLOC before leaving Betterment, or are allowed to take out an SBLOC at the other institution and use those proceeds to pay off the existing SBLOC with The Bancorp.

Betterment only supports variable-rate lines of credit at this time. The Bancorp’s SBLOC rates are based on the Wall Street Journal (WSJ) US Prime Rate plus or minus a spread determined by The Bancorp, which varies depending on the credit limit a client is approved for (the higher the credit limit, a greater the rate discount). Interest rates are adjusted monthly. Interest is only charged on the balance you have drawn from the SBLOC, but the applicable interest rate is based on the size of the ...

No, you are not able to exclude a goal if it is part of a pledged legal account for an SBLOC. All accounts are pledged at the legal account level. This includes Cash Reserve balances since they are part of the same legal account as a taxable investing account.

Yes, access to your Cash Reserve balances that are part of a pledged legal account can be impacted by opening an SBLOC. This is because Cash Reserve balances are part of the same legal account type as your taxable investing account. Thus, a withdrawal from your Cash Reserve could decrease your Daily Allowable Distribution (DAD) and potentially even cause a maintenance call. Your Daily Allowable Distribution (DAD) is the maximum amount you can withdraw from your pledged account(s) on a given day.

There is no application fee*, no annual or monthly fees, no cost for the portion of a credit line not drawn upon, and no prepayment penalties. *The Bancorp Bank does not charge an application fee. State, local and/or third-party fees may apply in some states.

You must contact The Bancorp to pay off your outstanding SBLOC. You cannot pay off your SBLOC via your Betterment investment accounts. This is because The Bancorp typically only allows a checking account (this includes Betterment checking accounts) or a wire transfer as valid methods to pay off an SBLOC balance. Once the loan is paid off, The Bancorp will notify Betterment so that we can “un-pledge” any collateralized accounts.

As with all forms of debt, SBLOCs have risks and are not appropriate for all clients. Some risks include: Market Volatility & Maintenance Calls - If the market value of a collateralized account declines below a minimum threshold, The Bancorp may require you to deposit additional funds as part of a maintenance call (or in more extreme situations, force liquidation of securities at an inopportune time–this is rare). SBLOCs Involve Hard Credit Pulls - An SBLOC underwriting with The Bancorp ...

Betterment is partnering with The Bancorp to offer SBLOCs for our Premium and Betterment Plus clients and Advised clients.

No, SBLOCs are non-purpose loans, which means you can’t use the proceeds to purchase or trade securities.

A securities-backed line of credit (SBLOC) is a revolving line of credit that uses non-retirement accounts as collateral. SBLOCs allow you to access a portion of the value of your non-retirement accounts as loans without liquidating investments. Some of the possible perks include: Tax Savings - Avoids tax consequences from realizing capital gains. Market Participation - Allows investors to continue benefiting from dividends, interest, and appreciation. Low Interest Rates - Often offered at ...

The application itself takes about 30 minutes to complete (this can vary). Establishing the line of credit on an individual account will typically take about 1 week, but certain application types (e.g., trust or business accounts), may take up to a month.

When filling out your SBLOC application, please keep the following tips in mind to avoid unnecessary rejections or delays in the process: Account number: All account numbers should be 15 digits and start 2680- Clients can find their account numbers on their statements or by going to Settings > Accounts Account title means the name of the person who holds the account Individual accounts: client’s name (John Smith) Joint accounts: both clients’ names (John Doe & Jane Doe) Trust accounts: ...

Only certain types of accounts are allowed to be pledged as collateral for an SBLOC: Allowable Account Types: Individual taxable accounts Joint taxable accounts Trust taxable accounts Taxable business accounts All portfolio strategies are eligible, including Cash Reserve, managed investing, Crypto and Self-Directed Investing (SDI) Ineligible Account Types: IRAs (Roth or Traditional) 401(k)s (Roth,Traditional, and Solo) HSAs Checking accounts

Clients must reach the necessary collateral requirements in their eligible account(s) sufficient to support a minimum credit line of $75,000. The exact account balance necessary to qualify for an SBLOC depends on the specific asset mix and The Bancorp’s advance rates (i.e., the maximum percentage of your pledged assets’ value that you are able to borrow) with respect to each type of asset. The Bancorp always has the discretion to modify their advance rates at any time). The Bancorp also runs a ...

Yes. An SBLOC is considered a full-recourse loan, meaning you are liable for the full amount of debt, even if that exceeds the balance of the pledged account.

The Bancorp can demand loan repayment at any time for any reason, though this is very rare. Please review the SBLOC application carefully for all details regarding loan repayments.

If you need assistance, please contact The Bancorp directly as they oversee the application platform and underwriting loans; Betterment does not have visibility into these steps in the process. If you contact Betterment, an agent can help direct you on how to contact the correct Bancorp line as well. SBLOC Application Assistance: If you have a question or need to troubleshoot during the SBLOC application/underwriting process, you should contact The Bancorp’s Business Development Team: Email ...

Yes, you can change the allocation/portfolio strategy of an account with an outstanding SBLOC balance. However, that may change the amount you are eligible to draw upon on a given day (this is the “Daily Allowable Distribution (DAD)” which is calculated by The Bancorp). This could trigger a maintenance call. For example, if you’ve borrowed the full amount available on a 70% stock portfolio and then raise your stock allocation to 90%, the value of your collateral may no longer cover your balance ...

Withdrawals on the Betterment platform are limited to your Daily Allowable Distribution (DAD), the maximum amount you can withdraw from your pledged account(s) on a given day. To request a withdrawal above the DAD amount, please reach out to us at support@betterment.com with your request and reason.

Having an SBLOCs or an outstanding SBLOC loan amount will not impact your goal projections or goal guidance provided. The whole point of an SBLOC is that you get to stay invested.

Any outstanding SBLOC balances will not be reflected against the total net worth number.

Yes, but note that there are limitations. You will not be able to participate in FPSL with respect to any SBLOC-pledged legal account which you have drawn upon and have an outstanding loan.