Liquidity Solutions

Premier Line of Credit – Meeting Your Liquidity Objectives and Cash Management Needs

Adhering to a disciplined investment strategy is important. Yet, if you ever encounter cash-flow issues, or want to make a major purchase, you might be forced to dip into your investments — a move which, if repeated often or executed at the wrong time in the market, could slow your progress toward your key financial objectives.

To maintain your investment portfolio while meeting your cash-management needs, you may want to take advantage of the Premier Line of Credit. This is available through the U.S. branch of Royal Bank of Canada. Your financial advisor, working with a dedicated Credit Specialist, can help you evaluate your cash flow and credit needs and provide you with appropriate liquidity solutions.

Using the Premier Line of Credit

The Premier Line of Credit is a revolving line of credit secured by one or more of your eligible investment accounts. The value and type of your eligible securities portfolio determines the amount of your Premier Line of Credit. You may elect to lock-in your loan rate for periods ranging from one month to one year.

One of the key benefits of loans funded through the Premier Line of Credit is the ability to offer you competitive interest rates which are LIBOR-based. LIBOR is the interest rate that the world’s largest international banks charge each other for loans. Historically, the LIBOR rate has been lower than the prime rate, the interest rate that U.S. banks charge to their most creditworthy customers.

Because of Royal Bank of Canada’s strong balance sheet and solid credit rating, it can borrow in global markets — and, in turn, offer you lower-than-average rates on your personal financing.

Source: RBC Correspondent Services Brochure #3115-CAS (12/12) 

Other features of securities-based loans include:

  • Choice of Fixed Interest Rate Periods — Choose a borrowing interest rate that is reset monthly, quarterly, annually or every two months — and have the flexibility to change the term as needed.
  • The Option to Borrow in Major Currencies — Allows you to take advantage of favorable differences in interest rates among major global currencies exchange rates through loans denominated in U.S. or Canadian dollars, Euros, Japanese yen, British pounds, or Swiss francs.
  • No Set Up Fee
  • Interest-Only Loans — Pay interest on a quarterly or monthly basis.
  • Flexible Repayment Options — The option to pay off the loan in whole or in part without prepayment fees on any date in the future when an interest rate reset occurs.
  • Lines of Credit Starting from $500,000

Meet a Variety of Goals With the Premier Line of Credit

You’ll find that the Premier Line of Credit is a flexible cash-management tool that you can use to help meet virtually any financial goal.

  • Refinance High-Interest Debt — Increase your cash flow by consolidating your high-interest debts.
  • Invest in a Business — Gain short term working capital to invest or expand your business, fund capital expenditures or finance a partner buyout.
  • Finance a Major Purchase — Acquire artwork, a pleasure boat or even a private aircraft.
  • Satisfy Tax Obligations — Pay off a tax bill quickly without having to sell investments.
  • Meet Real Estate Financing Needs — Purchase or remodel a home, or purchase investment property.

What You Should Know About the Premier Line of Credit

Premier Line of Credit may not be suitable for all investors. Before using any of these products, you should read the literature and the regulatory
disclosures that will be provided, and ensure you understand the risks involved. These securities-based loans are demand loans and are subject to minimum collateral requirements. You must maintain sufficient collateral to support your outstanding borrowings under the credit line.

Contact Us for more information on the Premier Line of Credit

Financing Your Business

As a business owner, entrepreneur or investor in a business, you may be wondering how to best secure financing for your unique goals. Which is why it may be prudent to consider all your alternatives when it comes to business loans.

Indeed, there are a broad range of practical reasons you may want to borrow money.

  • Starting an enterprise for yourself, a capable relative or trusted friend
  • Purchasing a franchise or passive business interest to produce potential income
  • Acquiring capital equipment or inventory (for growth or business continuity)
  • Expanding into new product lines, services or markets
  • Seizing opportunities to buy out a partner, competitor or distressed business

However, arranging the financing you need for your specific objectives can be time consuming and complex. And in today’s challenging economic environment, even well qualified, long-term borrowers are sometimes experiencing constrained access to funding from traditional sources.

Discover an Innovative Approach

The good news is that we offer securities-based lending solutions that provide the liquidity, convenience and simplicity you may be seeking.

  • Liquidity — As a revolving line of credit, these loans allow you to borrow, repay and borrow again up to you credit limit, as your needs change. Select either RBC Express Credit (margin) or RBC Premier Line of Credit (loan or standby letter of credit).
  • Convenience — The paperwork is minimal. Qualified loans can be approved quickly and easily. So you can get funding in as little as one week. You may also be glad to know we do not charge loan origination or maintenance fees. Plus, there is no minimum time requirement for your business to have been in existence.
  • Simplicity — These loans do not require extensive disclosures about your business, complicated ongoing reporting or compliance with financial covenants and ratios.

Maintain Your Progress Toward Personal Goals

While using eligible securities in your account as collateral for a loan is a resourceful way to obtain business financing, the benefits to you as an individual investor are equally important. Because this approach allows you to continue preparing for the financial future you want for yourself and the people you care about.

In this respect, used appropriately, securities-based lending can become an especially efficient business financing tool. Instead of selling investments to gain access to the cash you need, it can help safeguard you from the possible consequences of interrupting the wealth management strategies you and your financial advisor have so carefully implemented.

  • Avoid selling securities for a potential loss when markets are down or volatile
  • Preserve your asset allocation and securities positions for investment growth or periods of market recovery
  • Maintain your portfolio holdings for potential dividend and interest income
  • Avoid triggering unnecessary capital gains taxes

BNY Research and Commentary

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