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Access the capital you need with securities-based lending

Securities-based credit lines offer quick access to capital in lieu of raising cash through the sale of securities.

Already work with an advisor? Contact your Private Client Advisor to learn more about how securities-based lending can help meet your financial needs.

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Learn more about securities-based lending

What is securities-based lending?

Securities-based lending refers to the practice of using non-retirement, marketable securities such as stocks, bonds and mutual funds as collateral for a line of credit with J.P. Morgan Chase Bank N.A. (Chase Bank).

Why do clients use securities-based loans?

Clients often need capital to facilitate large transactions like real estate purchases or strategic investment opportunities, bridging cash flows or managing unexpected expenses.

Why consider securities-based lending?

By offering flexible access to liquidity as an alternative to selling assets, securities-based lending can help clients keep their long-term investments intact.

As with all investment decisions, it's important to understand the risks of borrowing before moving forward. Events beyond your control like market fluctuations that may reduce the value of your pledged securities, could lead to a margin call. We're here to help you make the decisions for your needs. Today and in the future.

Securities-based lending with J.P. Morgan

  • Benefit from flexible borrowing with no setup fees. Only incur interest on the funds you use.
  • Gain access to liquidity for a range of uses, such as an investment opportunity, a home renovation or a real estate purchase.
  • Remain invested in your assets while structuring your borrowing in a potentially tax-efficient way.
  • Manage your securities-based line of credit from anywhere with the Chase Mobile® app.

Work one-on-one with a dedicated advisor in your local community to create a personalized financial strategy and build a custom investment portfolio.

Work one-on-one with an advisor

Frequently asked questions

Securities-based lending refers to the practice of using non-retirement, marketable securities such as stocks, bonds and mutual funds as collateral for a line of credit with J.P. Morgan Chase Bank N.A. (Chase Bank).

Securities-based lending works by using securities as collateral for lines of credit. Borrowers typically pay interest only on the amount of credit used at rates that may be more competitive than other forms of borrowing.

As a condition of the loan, the lender normally places a pledge on pledged securities by depositing them into a separate account. Lenders therefore become the lienholder of the account, meaning they have a legal claim to its contents should a borrower default on the loan.

Securities-based lending carries different risks. For one, securities-based lines of credit are typically based on adjustable interest rates. This may increase your cost of borrowing if rates increase.

In addition, if the market value of the securities that being used as collateral declines, a line of credit may be subject to a maintenance call. In this scenario, borrowers in a shortfall may be required to deposit funds equal to or greater than the call amount, deposit securities with loan value equal to or greater than the call amount, sell securities with enough lending value to meet or exceed the call amount or otherwise pay down the loan.

Similarly, in the event of a default on the line of credit, the lender has the right to sell securities to satisfy your obligation.

The deductibility of interest paid on securities based loans is dependent on the structure of the loan facility and the use of loan proceeds. To determine whether your line of credit could offer you the ability to deduct the interest paid, you should speak to your tax professional.

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LEARN MORE ABOUT OUR FIRM AND INVESTMENT PROFESSIONALS AT FINRA BROKERCHECK.

To learn more about J. P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. Morgan Securities LLC Form CRS (PDF) and Guide to Investment Services and Brokerage Products.

IMPORTANT INFORMATION

Securities-based lines of credit are extended at the discretion of JPMorgan Chase Bank, N.A. (“Chase Bank”) and Chase Bank has no commitment to extend a line of credit or make loans available to you under a line of credit. Any loan extended under a securities-based line of credit is subject to credit approval by Chase Bank and, if approved, the terms and conditions contained in definitive loan documentation governing the line of credit. Proceeds from a securities-based line of credit cannot be used to purchase, carry or trade securities.

A line of credit collateralized by the securities in your investment account(s) involves certain risks and may not be suitable for all borrowers. Chase Bank assigns values to these securities and, at any time and without notice to you, may increase or decrease these values or change the eligibility of these securities as collateral. A decline in the value of these securities collateralizing your securities-based line of credit (whether due to a market downturn, market volatility or otherwise) directly impacts the amount of credit available to you and may require you to provide additional collateral and/or pay down your line of credit in order to avoid the forced sale of these securities by Chase Bank. The securities in your account may be sold to meet a collateral shortfall, and Chase Bank may sell your securities without contacting you. Some or all of the securities sold to meet a collateral shortfall may be sold at prices higher than their initial cost, which may result in adverse tax consequences. You should consult your tax advisor to fully understand the tax implications associated with pledging securities in connection with a loan. Please review these and other risks in more detail with your advisor, and make sure to read your line of credit documentation carefully so that you fully understand your obligations and the risks associated with this opportunity.

An exercise of remedies by Chase Bank in connection with your securities-based line of credit may affect the performance of your investment management or investment advisory account(s), and may cause such accounts to no longer conform to applicable investment guidelines. When selling securities, Chase Bank is not required to act in accordance with any fiduciary duty Chase Bank and its affiliates might otherwise have as your investment manager or investment advisor. It is important to note that Chase Bank and its affiliates may earn more if you borrow against your securities and other assets rather than liquidate assets to meet your cash needs.

The Secured Overnight Financing Rate (“SOFR”) is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. The SOFR is published by the Federal Reserve Bank of New York and is determined based on certain transactions in the U.S. dollar Treasury repo market. Since the SOFR is an overnight rate, it is published every Banking Day, but is e ective for the Banking Day prior to the date of publication. Refer to your definitive loan documentation for a definition of “Banking Day.” Because the SOFR is administered by the Federal Reserve Bank of New York, the Bank has no control over its determination, calculation or publication, and the Federal Reserve Bank of New York may alter the methods of calculation, publication schedule, rate revision practices or availability of the SOFR at any time without notice. The SOFR is a floating interest rate option, and changes in the SOFR can lead to a higher or lower cost of borrowing.

 

Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved. Past performance is not a guarantee of future results.

JPMorgan Chase and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your personal tax, legal and accounting advisors for advice before engaging in any transaction.

Asset allocation/diversification does not guarantee a profit or protect against a loss.

Bank deposit accounts, such as checking and savings, may be subject to approval. Deposit products and related services are offered by JPMorgan Chase Bank, N.A. Member FDIC.

Chase Mobile® app is available for select mobile devices. Enroll in Chase Online℠ or on the Chase Mobile® app. Message and data rates may apply.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

INVESTMENT AND INSURANCE PRODUCTS ARE:

  • NOT FDIC INSURED
  • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
  • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES
  • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED
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