In this article:
Overview
If you own a Wealthsimple corporate account, you can link eligible corporate investment accounts as collateral for your personal portfolio line of credit. This can increase your personal borrowing limit using assets you already hold at Wealthsimple. You can change your collateral accounts in the Wealthsimple app only. This isn't available on web.
This is different from a corporate portfolio line of credit, which is a separate account that lets your corporation borrow for itself.
At this time, this feature is only available if you're the only owner and the only director of your corporation.
Eligibility
To link a corporate investment account as collateral, you need to:
- Be the only owner and the only director of the corporation
- Hold a personal portfolio line of credit, or be setting one up
- Have an eligible corporate investment account
We don't support corporations with more than one owner or director at this time.
Eligible and ineligible accounts
These corporate account types are eligible as collateral.
- Managed corporate accounts
- Self-directed corporate accounts, except margin accounts
These account types are not eligible:
- Corporate margin accounts
- Corporate chequing accounts
- Corporate savings accounts
- Private equity or private credit corporate accounts
- Accounts already linked to another portfolio line of credit or margin account
Link your corporate account
You can change which accounts you use as collateral at any time in the Wealthsimple app (not available on web):
- Log in to the Wealthsimple app
- Tap your Portfolio line of credit account
- Tap Settings in the top right corner
- Tap Collateral
- Select the accounts you want to use as collateral
- Review the Account linking disclosure if prompted and tap Confirm
- Tap Save to apply the changes
How this affects your credit limit
We calculate your credit limit using 30% of the value of any corporate investment accounts you link, the same calculation used for personal collateral accounts.
You can link both personal and corporate accounts to the same portfolio line of credit. The same limit on the number of linked accounts applies to every portfolio line of credit, and your personal and corporate accounts count together toward it.
Your personal portfolio line of credit and any corporate borrowing products, like a corporate portfolio line of credit or a margin account, stay fully separate. Linking corporate collateral to your personal portfolio line of credit doesn't affect your corporate borrowing, and the other way around.
Your portfolio line of credit is secured by the investments in your linked collateral accounts. We recalculate your credit limit daily based on the value and risk profile of those investments, and it can decrease without notice. If your collateral value falls or your balance goes over your credit limit, you may need to repay part or all of your balance or add collateral. If you don't, we may sell investments in your collateral accounts to reduce or clear what you owe. These investments may be sold at a loss, at a time you don't choose, and this may have tax implications.
The Guarantee and Account Pledge Agreement
Before your corporate account link is active, you need to sign the Guarantee and Account Pledge Agreement. This is a new agreement. You sign it in addition to our standard collateral linking disclosure.
Because you're the only owner and director of your corporation, you sign for yourself as the borrower and on behalf of your corporation as the guarantor, which means your corporation guarantees your personal borrowing.
You sign the agreement once for each corporation, the first time you link one of its accounts. It covers any accounts you link or unlink later. If you link accounts from more than one corporation, you'll sign a separate agreement for each one.
The agreement comes with a schedule that lists every account it covers. The schedule updates each time you link or unlink an account. You can find the signed agreement and the schedule in your Documents, for your portfolio line of credit and for each linked corporate account.
Tax considerations
There may be tax implications. How they apply depends on how your business is set up and what you use the funds for. Our tax experts can walk you through what it means for your situation, and your accountant will want to weigh in too.
Frequently asked questions
Can I use my corporation's investment accounts as collateral for my personal portfolio line of credit?
Yes, if you're the only owner and the only director of your Wealthsimple corporation and it has an eligible investment account. Linking those accounts can raise your personal credit limit. We're offering this to a small group of invited clients first, so you won't see the option until your account has been added.
What is a cross-guarantee?
It's an agreement where your business pledges its investment account as collateral for your personal borrowing. No money moves, and your business isn't lending you anything. Its assets simply stand behind your personal line of credit, which is what lets us extend a higher limit. The agreement you sign is called the Guarantee and Account Pledge Agreement.
Which corporate accounts can I link?
Managed and self-directed corporate accounts, except margin accounts. You can't use corporate chequing or savings accounts, private equity or private credit corporate accounts, or accounts that are already linked to another line of credit or margin account.
Do I need to sign anything?
Yes. You'll sign the Guarantee and Account Pledge Agreement, in addition to our standard collateral linking disclosure. You sign once for each corporation, the first time you link one of its accounts. Because you own and direct your corporation, you sign for yourself and for your corporation.
The agreement comes with a schedule that lists every account it covers. The schedule updates when you link or unlink accounts. You can find both documents in your Documents section, for your portfolio line of credit and for each linked corporate account.
Are there tax implications if I link my corporate accounts?
There may be. It depends on how your business is set up and what you use the funds for. Our tax experts can walk you through what it means for your situation, and your accountant will want to weigh in too.
What are the risks of borrowing against my investments?
The investments in your linked accounts are the collateral, so a large drop in their value can force your hand. If the value of your investments falls far enough, you may need to add funds or sell some holdings, possibly at a loss and with tax consequences. Interest accrues for as long as you borrow, and rates can change.
Does linking my corporate accounts affect my corporate portfolio line of credit or margin account?
No. Your personal portfolio line of credit and your corporate borrowing are separate. Collateral linked to your personal portfolio line of credit doesn't change your corporate portfolio line of credit's credit limit, and the other way around.
Can I use the same corporate account for a margin account and my portfolio line of credit?
No. An account can be collateral for either a margin account or a portfolio line of credit, not both at the same time. If your corporate account is already backing something, our team can go through your options with you.
Can I link both my personal and corporate accounts to the same portfolio line of credit?
Yes. The same limit on the number of linked accounts applies to every portfolio line of credit, and your personal and corporate accounts count together toward it.
Can I use this if my corporation has more than one owner or director?
No, not at this time. It's only available when you're the only owner and the only director.
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