A Liquidity Access Line (“LAL”),1 offered by Morgan Stanley Private Bank, National Associa tion or Morgan Stanley Bank, N.A., as applicable, if you qualify, can help you meet your financing needs while helping to keep your overall investment strategy on track. LAL provides you with credit, through a variable line of credit, fixed rate advance or standby letter of credit, based in large part, on the value of the eligible securities pledged as collateral. You can finance real estate purchases, fund tax obligations, cover business expenses or any other financing need – without liquidating assets. LAL’s tiered interest rate is based on your total advance limit, giving you access to very competitive interest rates.
There are risks associated with using your assets as collateral in a securities based loan, including possible margin calls on short notice. See below for details.
interest rates
To satisfy regulatory requirements, the minimum facility amount is $100,000 at the time of loan booking. Interest rate is based on the corresponding LIBOR (London Interbank Offered 1 Disbursements are subject to available credit and are at the sole discretion of Morgan Stanley Private Bank,
Rate) index plus an incremental percentage — also known as a spread — which is determined by the approved total advance limit.
For a variable rate revolving line of credit, the index is the 30-day LIBOR, which is set on the first business day of each week using the index from the last business day in the immedi- ately preceding week. For a fixed rate advance, the index is the LIBOR that corresponds to the duration of the applicable fixed rate period. If you choose a specific loan amount for the line of credit or select a fixed rate advance, the interest rate is determined according to the grid below.
aPProved line oF credit/loan amount interest index rate, Plus
$100,000 – $249,999 5.00% $250,000 – $499,999 4.00% $500,000 – $999,999 3.50% $1,000,000 – $2,499,999 3.00% $2,500,000 – $4,999,999 2.75% $5,000,000 – $9,999,999 2.50% $10,000,000+ 2.25%
Morgan Stanley Private Bank, National Association or Morgan Stanley Bank, N.A., as appli- cable, offers the flexibility to increase your LAL total advance limit automatically if its set-up as maximum, it is less than $3,000,000 and you either deposit additional eligible collateral or the value of your existing eligible collateral increases. At the sole discretion of Morgan Stanley Private Bank, National Association or Morgan Stanley Bank, N.A., as applicable, and without further notice to you, your total advance limit may increase based on the value of your eligible collateral, but will not exceed $3,000,000.
If you choose this convenient option, the Interest Rate Spread will be determined according to the above grid using a different methodology: the Interest Rate Spread will be based on the peak value of eligible collateral within the first 35 days after the line is available, which results in the lowest possible Interest Rate Spread for you. After the first 35 days, the total advance limit will fluctuate based on the value of eligible collateral, but the Interest Rate Spread will remain the same.
quick access to Your Funds
Applying for an LAL is quick and easy. LAL has competitive floating - or fixed-interest rates with typically no fees.2
In addition, LAL is easy to set up and manage online. You can access funds on demand with flexible repayment options. To access funds, you can either login to Morgan Stanley Online, use your LAL checkbook or work with your branch for other withdrawal options. LAL can be used to finance real estate purchases, fund tax obligations, cover business expenses or any other financing need - without liquidating assets. The proceeds from an LAL loan/line of credit (including draws and other advances) may not be used to purchase, trade, or carry margin stock; repay margin debt that was used to purchase, trade or carry margin stock; and cannot be deposited into a Morgan Stanley Smith Barney LLC or other brokerage account.
revolving line oF credit & Fixed rate advances
Use your LAL as a revolving line of credit or fixed rate advance to maintain cash flow while making large purchases such as real estate and using your eligible collateral, including restricted 2 Clients may be responsible for the fees of a third party law firm engaged by Morgan Stanley Private Bank, National Association or Morgan Stanley Bank, N.A., as applicable, to review complex LAL transactions (e.g., review of trust agreements). Clients will also be charged a fee for the issuance of a letter of credit, for prepayment of principal on fixed rate advances, and upon a client’s request for certain cash management services (e.g., duplicate statement or check re-order).
or concentrated stock. If qualified, you can lock in an LAL fixed rate advance for up to seven years with various payment options.
standBY letters oF credit
Standby Letters of Credit,3 which help establish proof of funds, can be used to back up a credit line for a small business, for example, or to guarantee advance payments.