TD Custom Lending Solutions

1. You can lose pledged securities and still owe money.

If the value of collateral falls, your available borrowing capacity declines, or you do not satisfy your obligations, TD Bank may require you to provide additional eligible collateral, pay down the balance, or take other corrective action. If you do not comply within the required time, TD Bank may sell or otherwise liquidate some or all pledged assets as permitted by the Loan Documents and applicable law.

• TD Bank may sell securities at an unfavorable time, in a declining market, and at prices you believe are unfavorable.
• You may not be entitled to choose which securities or other assets are sold, the timing of a sale, or the sales venue.
• You may not be entitled to additional time to satisfy a collateral call.
• You can lose more than the funds deposited in the collateral account and remain responsible for any unpaid principal, interest, fees, and other amounts owed after collateral is sold.

2. TD Bank may act without prior notice.

Do not rely on receiving a collateral call, margin call, advance notice, or opportunity to cure before TD Bank exercises its rights. TD Bank may liquidate collateral without prior notice to the extent permitted by the Loan Documents and applicable law. TD Bank’s decision to issue notice or permit time to cure in one instance does not require it to do so in the future.

3. Market decline, concentration, and volatility can trigger a collateral shortfall.

The market value of securities can fluctuate significantly and may decline rapidly. Concentration in a particular issuer, industry, region, asset class, or highly volatile investment can amplify these risks.

• A concentrated or volatile security may receive a lower advance rate, become ineligible collateral, or produce large changes in available borrowing capacity.
• A single market event affecting a concentrated position can create a collateral deficiency and increase the likelihood of a forced sale.
• Maintaining your investments while borrowing against them does not eliminate investment risk; your portfolio may decline while you continue to owe the loan balance and interest.

4. Leverage Risk

Investment returns may not be enough to offset the cost of borrowing. If you borrow through an SBLOC, you may experience a net loss if the returns, gains, dividends, or other income from your TDPCW account are less than the interest and other costs TD Bank charges on the amount borrowed.  Additionally, TDPCW has an incentive to recommend (or select for TD Managed Accounts) investments to secure sufficient revenue or returns to cover interest payments on TD Bank’s loans.  Also, in order to preserve sufficient collateral value to support the loan, TDPCW may be inclined to recommend (or select for TD Managed Accounts) assets in more conservative investments, which may result in lower investment performance than more aggressive investments⁵ (depending on market conditions).

Interest is charged on the outstanding amount borrowed. TD’s current program materials describe a rate based on SOFR plus a spread, which may vary based on the structure of the credit facility, line size, and portfolio composition. A variable rate may increase your borrowing cost over time.

• Before drawing, understand the current rate, benchmark, spread, payment frequency, whether interest may be capitalized, and every fee or expense that may apply.
• If unpaid interest is added to your outstanding balance under the Loan Documents, your indebtedness may increase, reducing borrowing capacity and increasing the risk of a collateral deficiency.
• Investment returns, dividends, interest income, or cash-sweep yields may be lower than your SBLOC interest cost.
• You should have a reasonable source of repayment apart from the anticipated appreciation of the pledged investments.
• Interest, fees, and other SBLOC charges are separate from any advisory, brokerage, custody, or account-level fees you may pay in connection with your investment relationship.

While the pledge is outstanding, TD Bank may have rights in the pledged account that limit your control over assets. Depending on the account structure, custodian, and Loan Documents, your ability to trade, transfer assets, withdraw cash, make gifts or charitable transfers, change ownership, change investment strategies, or close or move the account may be restricted or may require TD Bank approval.

• For Brokerage Clients, you may be able to continue trading only to the extent permitted by the Loan Documents and the trade does not cause a collateral deficiency or otherwise violate applicable requirements.
• Certain account features—including check writing, debit-card access, cash management, recurring distributions, and similar services—may be restricted, suspended, or changed when an account is pledged.
• Moving assets to another broker, custodian, or ownership structure may require TD Bank’s consent, a replacement control agreement, additional collateral, or repayment of the SBLOC.
• You remain responsible for reviewing account and loan information, maintaining current contact information, and promptly responding to communications or requests relating to the facility.

Pledging securities can have tax and legal consequences. TD Bank, TDPCW, and their employees do not provide legal or tax advice.

• A forced sale of pledged securities may cause taxable gains or losses, may affect your overall tax position, and may occur when it is not advantageous to you.
• Interest paid on an SBLOC may not be tax deductible. Consult your independent tax advisor about interest deductibility and all consequences of the proposed use of proceeds.
• You remain responsible for tax reporting and tax obligations related to the pledged account and transactions in that account, including transactions initiated to satisfy loan obligations.
• For accounts owned by a trust, entity, joint owners, or other fiduciaries, the persons acting for the borrower must have authority to pledge assets, authorize information sharing, and enter into the Loan Documents. TD Bank may require supporting documentation or signatures.
• If the proceeds will support a real estate, estate-planning, business, or other complex transaction, consult independent legal and tax advisors before borrowing.

An SBLOC is one of several possible ways to meet a liquidity need. Compare its costs, risks, terms, tax effects, repayment requirements, and collateral consequences with other options that may be available to you, such as:

• Using cash on hand or liquidating assets.
• A margin loan, home equity line of credit, mortgage, personal loan, business loan, or financing from another bank, credit union, or lender.
• A transaction-specific source of financing that may have a stated repayment schedule or does not permit the lender to sell investment assets on short notice.

Questions to ask before you proceed

What is my current rate and spread?

Which securities are eligible and at what advance rates?

What events can reduce availability?

What collateral call notice, timing, and remedies apply?

Which account functions will change? How will the loan affect a planned transfer, real estate transaction, trust strategy, or tax position?

What compensation or other benefits do TD Bank and TDPCW receive?

What alternatives have I compared?