Securities Backed Line of Credit


SBLOC Application 
Benefits of the SBLOC
Credit Limits and Advance Rates
Interest Rates
SBLOCs for Entities
SBLOCs for Trusts
Accessing SBLOC Funds
Payments and Payoffs
Additional Disclosures
 

Securities-Backed Line of Credit (SBLOC) Application 

Instructions for submitting the SBLOC Application:

Please submit (a) the completed, signed SBLOC Application, (b) supporting documentation, if applicable, and (c) a copy of each applicant’s driver’s license to SEI:

By Mail:
SEI Private Trust Company
Attn: Advisor Network (Service Team)
P.O. Box 1098 Oaks,
PA 19456-9907

By Fax:
610.676.1021

Electronic Submission:  
www.SEIAdvisorCenter.com
Select Actions > Manage Forms

For additional contact information, please select Help > Resources > Contact SEI, from the home page of www.SEIAdvisorCenter.com.

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Benefits of the SBLOC

A Securities-Backed Line of Credit (SBLOC) offers clients flexibility and convenient access to their funds. An SBLOC is a revolving line of credit secured by the assets in the SEI portfolio. The SBLOC lets your clients access the value of their investment portfolio without disrupting your carefully constructed investment strategy.

An SBLOC is ideal for clients who need access to funds for real estate purchases, tuition payments, taxes or other large expenses – anything except the purchase of additional securities. Since the portfolio is held as collateral, your clients avoid potential tax consequences associated with liquidating assets while you continue to maintain management of the portfolio.

Applying for an SBLOC involves minimal paperwork and there are no application or set up fees1. No interest will be charged until the line is in use, and there are no annual maintenance fees for simply having the line in place. For these reasons, many advisors opt to proactively put an SBLOC in place for their clients as a safety net for unforeseen expenses.

SBLOC clients will receive free standard checks to access their line and domestic wire transfers from the SBLOC are at no charge.  Checks are provided upon account opening and Wire Request Forms are available online anytime so that clients are able to quickly and easily access their funds as needed.

An SBLOC can also be linked to the SEI Cash Access checking account for overdraft protection if desired. An SBLOC linked to a CAA for overdraft protection will be the first source we reach out to in the event of an overdraft. If the remaining balance of the SBLOC can support the overdraft amount, we will not pull any funds from the cash in the SEI portfolio. Please note that if overdraft protection is in place and the SBLOC does not support the overdrawn amount, the item will follow the normal overdraft process.

1The Bancorp Bank does not charge an application fee. State, local, and/or third-party fees may apply in some states.

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Credit Limits and Advance Rates

SBLOC credit limits are based on the type and value of underlying collateral. Asset classes are assigned specific advance rates. The advance rates are assigned to the pledged account according to the account structure. If a pledged account is allocated across various asset classes, a blended advance rate will be assigned.

Clients applying for an SBLOC will receive the maximum amount allowed by the advance rate, or may request a specific amount provided that it is not more than the allowable max. If the line is for the maximum credit amount, the limit of the SBLOC will automatically increase as the value of the portfolio increases. An SBLOC established with a specific line amount will keep the same limit as long as the portfolio can support the balance.

Asset Class

Advance Rate

Cash & Equivalents

100%

US Treasury Instruments

90%

Investment-Grade Municipal & Corporate Bonds

80%

Non-Investment Grade Municipal & Corporate Bond Funds

50%

Equities

50%

Special Notes- Asset class advance rates apply for both individual securities and pooled vehicles, like mutual funds and ETFs – with the exception of Non-Investment Grade Fixed Income, which are only acceptable as collateral when held within diversified mutual funds or ETFs. All Treasury, Municipal, and Corporate fixed income instruments are evaluated on Market Value. Finally, concentrated portfolio holdings are subject to reduced advance rate calculations at the discretion of The Bancorp.


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Interest Rates

Current Rate Schedule (As of 12/16/2018):
Rates subject to change

COMMITMENT AMOUNT - VARIABLE INTEREST RATES
THREE-YEAR FIXED INTEREST RATES

COMMITMENT AMOUNT - VARIABLE INTEREST RATES
The interest rate on a client’s securities-backed line of credit may vary based on the maximum drawing power of your client’s loan (commitment amount) at the time of application, and is calculated using the sum of the Wall Street Journal Prime Rate (WSJP) and the margin set out below.  Changes to the Total Commitment Amount of your client's loan may result in a change to their interest rate*.

Commitment Amount
(Maximum Draw)                                 

Rate Calculation              

  Floor     

$75k - 99,999.99

WSJP - 0.25%      

  None

$100k - 249,999.99

WSJP - 0.25%

  None

$250k - 499,999.99

WSJP - 0.50%

  None

$500k - 999,999.99

WSJP - 0.75%

  None

$1MM+

WSJP - 0.75%**

  None

*Collateral additions, subtractions, or market value changes may reassign the loan to a new rate tier in the table above. Interest rate review requests must be made in writing, using the change request form that is available on our client website.  
**Negotiated pricing based on supporting documentation of competing offer.


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THREE-YEAR FIXED INTEREST RATES
There is also a fixed interest rate option available for a securities-backed line of credit. Fixed rates are available for a three-year period; any loan balance remaining at the end of the three years will convert to a variable interest rate. Both new and existing borrowers* may take advantage of the fixed rates, which are detailed below. As with variable rate loans, the interest rate tier is determined by the maximum drawing power of your client’s loan (commitment amount) at the time of application.  

Commitment Amount 
(Maximum Draw) 

Rate Calculation  

  Floor  

$75k - 99,999.99

WSJP + 1.25%

  None

$100k - 249,999.99

WSJP + 1.00%

  None

$250k - 499,999.99

WSJP + 0.75%

  None

$500k - 999,999.99

WSJP + 0.50%

  None

$1MM+

WSJP + 0.50%**

  None

*There is no fee to convert an existing securities-backed line of credit carrying a variable interest rate into a fixed interest rate. There is a $500 fee to convert an existing fixed interest rate securities-backed line of credit to a variable rate or to lock in a new fixed rate schedule prior to the completion of the current 3-year term.
**Negotiated pricing based on supporting documentation of competing offer.

PLEASE NOTE: Your clients have the ability to revolve their credit line, giving them the flexibility to draw and repay the line without early repayment penalties throughout the three-year period. There is no minimum draw amount and there is no time limit to make an initial draw on the line.



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SBLOCs for Entities

Entity SBLOCs are subject to additional review and underwriting. SBLOC requests for an entity are underwritten and processed by a commercial lender and will require additional disclosures and Loan Committee approval. Owners of the entity will be required to personally guarantee the debt. Interest rates may vary so we encourage you to contact us to discuss your client’s specific circumstance.  

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SBLOC for Trusts

There are additional components of the SBLOC account-opening process when trusts are involved that financial advisors need to know.  Following the guidelines outlined in the Quick Card for Trusts can help expedite account opening and activation.

Trustee Certification/Affidavit for SBLOCs

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 Accessing SBLOC Funds

There are a variety of ways a client can access a Securities-Backed Line of Credit (SBLOC).

Check Writing 
Clients can write a check from their line of credit checkbook.  Funds must be available on the SBLOC to satisfy the entire check amount.

Wire Transfers 
Funds can be transferred from an SBLOC account by submitting a completed Wire Request Form for Securities Backed Line of Credit (Domestic & International). Domestic wire transfers from the SBLOC are free of charge. See Schedule of Fees for International wire fees.

 

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Payments and Payoffs

Payment Options
Clients can make monthly interest payments or additional principal payments at any time in the following ways:

By ACH
Interest payments can be automatically debited from the client’s external checking account.  Please complete the ACH Loan Payment form

By Wire Transfer
Instructions: The Bancorp Bank
Wilmington, DE 19809
ABA Number 031101114
Account Number 001119100
FBO Account Title/SBLOC Loan Number

By Check
Please make check payable to The Bancorp Bank 

Mail to: The Bancorp Bank
Attn: Loan Operations
409 Silverside Road, Suite 105
Wilmington, DE 19809

IMPORTANT:
Please specify on the check memo line or on the wire transfer form (Part 2: Reference) how the additional payment should be applied to the loan account:  

  • Regular payment
  • Regular payment plus additional principal payment
  • Principal payment
  • Payoff and keep account open
  • Payoff and close account 

By Interest Capitalization
Clients have the option to capitalize the interest on their SBLOC. Instead of paying the monthly interest on the line, clients can authorize us to capitalize the interest payment, adding it to the loan principal. Note: This may significantly increase the overall cost of borrowing. Advisors should discuss this option thoroughly with clients.

Interest Capitalization Form 

For any questions about payments, please call the help line.
 

Payoff Instructions
A client can request to have their loan account paid off in full and closed.  For more information or to get a payoff quote, please call the help line.

 

Additional Disclosures

The Bank may reduce the credit limit if, in its sole discretion, it determines that the value of the collateral is no longer sufficient to support the line of credit. For example, if market fluctuations produce a significant loss of value in the collateral account or if the reallocation of assets from an asset class with a higher advance rate to one with a lower advance rate results in insufficient collateral value, the credit limit will be reduced accordingly.

The securities used for collateral are restricted. Approval is required for certain transactions.

The terms, loan structure, and pricing of the SBLOC Program are subject to change upon The Bank’s discretion.

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This SEI Cash Access Account service is made available by SEI Investment Company to its custodial clients. Banking services are provided by The Bancorp Bank, Member FDIC, which is not affiliated with SEI Investment Company or any of its other subsidiaries. © 2009-2016 SEI

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