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Alternative Solutions to Help You Plan for the Unexpected

By: Randy Beaman, Vice President and Relationship Manager at Univest Bank and Trust Co., and Brian Hungarter, Wealth Advisor at Girard, a Univest Wealth Division

Liquidity. Debt. Cash flow issues. Market volatility. For many, thinking of these concepts invokes feelings of uneasiness or anxiety. Despite best efforts to plan for the contrary, cash crunches are an inevitable part of life, and unfortunately life does not come with a pause button for uncertain times.

Perhaps you found an urgent opportunity to expand your business or purchase your dream home that just hit the market. Maybe you have the opportunity to move your family prior to selling your existing residence or you need to cover costs for a major purchase or health event. Creating liquidity out of thin air can be a challenge and invading your investment portfolio during uncertain times does not always lead to the best long-term results. Fortunately, there is a solution for short-term expenses that does not require liquidating a chunk of your portfolio and paying the corresponding tax bill. Securities-backed lines of credit (SBLOCs) provide a compelling alternative for clients who prefer to cover liquidity needs without invading their investment portfolio.

With SBLOCs, you can borrow against the value of your taxable investment accounts at a potentially lower interest rate. SBLOCs are a revolving line of credit from which clients can draw funds at any time. SBLOCs utilize your investment portfolio as collateral for a loan which helps to obtain a lower interest rate than other types of immediate financing such as credit cards, non-collateralized loans or loans that use illiquid collateral such as a home equity loan.

Designed to provide cash flow flexibility, SBLOCs feature interest-only monthly payments and may have longer repayment periods available than margin loans (another type of loan that allows you to borrow against the value of certain types of investments) and other forms of immediate financing. However, while making interest-only payments may lower your monthly payment, this will not reduce the amount of principal you will owe at the end of the loan. Principal payments can be made during the loan term and any outstanding balance is due at maturity. SBLOCs require clients to maintain specified funding levels in their collateralized account for the duration of the loan, so access to your investment portfolio above and beyond the SBLOC limit amount is restricted while an outstanding loan exists.

If you envision a short-term cash need on the horizon or want to create an emergency liquidity solution to have available when unexpected events occur, please reach out to your Girard Advisor today to learn more about how a Securities-Backed Line of Credit, in partnership with our parent company, Univest Bank and Trust Co., might benefit you and your family.


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Univest Bank and Trust Co. (Univest) is Member FDIC and an Equal Opportunity Lender.

To qualify for a Univest Securities-Backed Line of Credit (SBLOC) you must be a client of Girard, A Univest Wealth Division and be on the TD Ameritrade investment platform or have a Univest Trust Investment account. All SBLOC applications are subject to approval. Terms and conditions are subject to change at any time without notice.

1. Loans are approved and funded/settled through Univest Bank generally within 4-to-5 business days and are subject to the terms of all loan documentation.
2. Interest Rate is a variable rate equal to the Wall Street Journal announced LIBOR 1-month rate effective on the last day of each month, plus tiered basis points per annum, for each interest period.
This article is for general informational purposes only and is not intended to provide legal, tax, accounting or financial advice. The information in this article, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.