Pay Your Taxes and Maintain Your Wealth with a Securities-Backed Line of Credit

Dustin Carnevale, VP, Business Development Officer | Institutional Banking | 1/17/2020 5:05 PM

As the year ends, we often begin to develop resolutions to make the coming year better, brighter and more successful. However, this may not include ways to make more informed decisions about making our tax payments. Even though annual tax obligations generate financial stress for investors, businesses, and families alike, we are sometimes at a loss about how to be more efficient and effective in managing our yearly debt to the Internal Revenue Service (IRS).

For advisors and their clients, meeting tax obligations can often result in liquidating portfolio holdings, which disrupts their clients’ investment strategy and results in loss of portfolio value. The good news is that The Bancorp’s Securities-Backed Line of Credit (SBLOC) enables advisors and their clients to efficiently and effectively leverage non-retirement-invested assets to secure a flexible, fee-free line of credit by pledging their portfolio as collateral. More importantly, the SBLOC provides convenient access to liquidity to pay tax bills and meet other cash needs all year long without disrupting any long-term financial goals.

Additional SBLOC benefits include:

  • Clients can reduce the stress related to cash availability and the loss of earned income. Drawing on a line of credit can ease the potential negative consequences of liquidating assets. More importantly, SBLOC principal balances have no set principal payment deadline and can be paid down at the client’s discretion, with only a minimum monthly interest payment required.
  • Financial advisors can maintain their current wealth management strategy, avoid disruptions, and reap the benefit of a growing market. Assets with a low cost-basis, restricted shares, or impending bonuses can be strategically sold at the advisor’s discretion, as opposed to a disruptive liquidation.

If a looming tax bill or upcoming financial obligations could reduce your clients’ cash position, now is the ideal time to recommend a Securities-Backed Line of Credit (SBLOC) with The Bancorp.

The Bancorp Bank does not charge an application fee. State, local, and/or third-party fees may apply in some states. Clients are advised to consult a financial/tax professional regarding potential tax implications involving their investment portfolio. An SBLOC cannot be used for the purchase of additional securities or to pay off a margin loan that was used to purchase securities.

Securities-based lending has special risks and may not be suitable for everyone. To help maintain the security of financial information, do not include confidential personal information such as account numbers or Social Security numbers in non-secure email correspondence.


The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.