Lending

What is a Loan Management Account® (LMA® account)?

An LMA account is a securities-based loan that can help you finance education expenses without depleting your cash reserves or disrupting your investment strategy. An LMA account may help you close the gap between your savings and a tuition bill.

The LMA account is a flexible line of credit offered by Bank of America, N.A. With an LMA account, you can use a broad range of eligible assets as collateral, while keeping your investment strategy on track.

More Information on LMA accounts

What are the benefits of an LMA account?

  • Easy and efficient access to funds
  • Competitive interest rates
  • No minimum balances or minimum draws required
  • Multiple loans in a single account; apply only one time
  • Flexible repayment options
  • No set up costs or annual fees
  • Simple tracking and management of account activity

UNDERSTANDING RISKS ASSOCIATED WITH YOUR LMA ACCOUNT

Securities-based financing involves special risks. When considering a securities-based loan, you should take into account your individual requirements, portfolio composition and risk tolerance, as well as capital gains taxes, portfolio performance expectations and investment time horizon.

The risks you should be aware of include:

  • A decrease in the market value of your eligible securities may require you to deposit additional funds to meet a collateral maintenance call.
  • A collateral call could disrupt your investment strategy.
  • A complete description of the loan terms can be found within your loan agreement.
  • Your assets may be sold to meet a collateral call; the firm can sell those assets without notifying you and you are not entitled to choose which securities in the account will be sold.
  • You are not entitled to an extension of time to meet a collateral call.
  • The Bank may demand full or partial repayment of the LMA account at any time.
  • The LMA account is fully recoursed to you and you will remain responsible for any deficits on the LMA account.
  • If any or all of the eligible assets are sold at prices higher than the initial purchase cost, you may suffer adverse tax consequences.
  • You should discuss with your independent tax advisor the tax implications of pledging assets as loan collateral.
  • For fixed-rate and term loans, principal payments made in advance of the due date, whether voluntarily or involuntarily, due to demand or liquidation by the Bank, may be subject to a substantial breakage fee as determined by the Bank.
  • Some restrictions may apply to loans used to purchase, carry or trade certain securities.

The Loan Management Account® (LMA® account) is provided by Bank of America, N.A., Member FDIC, Equal Opportunity Lender. The LMA account requires a brokerage account at Merrill Lynch, Pierce, Fenner & Smith Incorporated and sufficient eligible collateral to support a minimum credit facility size of $100,000. All securities are subject to credit approval and Bank of America may change its collateral maintenance requirements at any time. Securities-based financing involves special risks and is not for everyone. When considering a securities-based loan, consideration should be given to individual requirements, portfolio composition, and risk tolerance, as well as capital gains, portfolio performance expectations, and investment time horizon. The securities or other assets in any collateral account may be sold to meet a collateral call without notice to the client. The client is not entitled to an extension of time on the collateral call, and the client is not entitled to choose which securities or other assets will be sold. The client can lose more funds than deposited in such collateral account. A complete description of the loan terms can be found within the LMA agreement. Clients should consult with their own independent tax advisor. Some restrictions may apply to purpose loans, and not all managed accounts are eligible as collateral. All applications for LMA accounts are subject to approval by Bank of America, N.A. For fixed rate and term advances, principal payments made prior to the due date will be subject to a breakage fee.

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