Form 1040

Many clients consider liquidating assets when faced with a tax obligation, yet this may trigger even more taxes in the form of capital gains.

A Nationwide Smart Credit℠ line of credit may provide a suitable alternative. It is a securities-backed line of credit that allows a client to borrow against their portfolio. By using their assets as collateral, your client can access the cash they need without disrupting their investment strategy.

Compare: Smart Credit vs. asset liquidation

Borrowing with Nationwide Smart Credit Liquidating assets
Your client can borrow a portion of the value of their portfolio for personal purposes. Selling securities could result in negative tax consequences.1
Their portfolio remains intact and maintains its growth potential, and you keep assets under management. A client already concerned about a tax liability may face a capital gains tax.1
Your client can quickly access funds; new lines can be originated in hours.2 The long-term performance of your client’s portfolio could be affected.

Other possible uses for Nationwide Smart Credit

This liquidity solution is not just for paying tax bills. At any time of year, Nationwide Smart Credit may be an answer for funding needs.

Things to consider

Nationwide Smart Credit lines carry risks. If the value of your client's portfolio falls below a certain level, they may be required to provide additional securities as collateral or cash to immediately pay down part of the line. If that's not possible, some investments may be liquidated, resulting in potential tax consequences.

Specifically, the risks include the fact that the lender may:

  • Suspend and/or terminate the client's line of credit
  • Declare all indebtedness immediately due and payable
  • Sell any collateral in order to maintain the loan-to-value requirement3
  • Require additional collateral from the client in order to meet the loan-to-value requirement
  • Require the client to pay down the principal in order to meet the loan-to-value requirement

Nationwide is here to help. To learn more about securities-backed lending, explore our Smart Credit resources.

[1] Please consult your tax advisor for any tax implications.

[2] The speedy origination applies only if the custodian allows for e-signature on the control agreement and processes the agreement in a timely way.

[3] The maximum line of credit is based on securities pledged.

The purpose of a Nationwide Smart Credit line of credit must be for personal, family or household purposes and not for securities investments or to purchase or carry margin securities, which include: (1) stocks that are registered on a national securities exchange, or any over-the-counter security designated for trading in the national market system; (2) debt securities (bonds) that are convertible into margin stock; and (3) shares of most mutual funds.

California: Loans made or arranged pursuant to a California Lenders Law License. Delaware: Nationwide SBL is licensed by the Delaware State Bank CCL commissioner to engage in business in this State under license number 035414, expires 12/31/2023. Maryland: License Number 03-2423. Oregon: License number 1804109. Rhode Island: Rhode Island Licensed Lender. Washington: License number CL-1804109. Not available in Mississippi, Montana, Nevada, and Vermont.

Nationwide, the Nationwide N and Eagle, Nationwide Smart Credit and Nationwide is On Your Side are service marks of Nationwide Mutual Insurance Company.

Nationwide SBL, LLC dba Nationwide Smart Credit (NMLS): 1804109 NMLS Consumer Access: https://www.nmlsconsumeraccess.org.