Securities-backed line of credit (SBLOC)
Also: SBLOC, securities-backed line of credit, securities-based loan
A revolving line of credit collateralized by marketable securities held in a brokerage account. Offers quick liquidity at competitive rates without selling the underlying portfolio.
A Securities-Backed Line of Credit is a non-purpose loan, meaning proceeds cannot be used to buy additional securities, secured by marketable securities in a brokerage account. Advance rates depend on the asset type: typically 50% to 70% for individual equities, 85% to 95% for Treasuries, and 70% to 90% for diversified ETFs. Rates are typically set at a spread above SOFR, currently ranging from 1.5% to 4% depending on balance tier. The borrower can draw, repay, and redraw as needed, and no fixed repayment schedule applies. If the collateral value falls, the broker can issue a maintenance call or forced sale.
Example: a post-IPO engineer has a $4 million diversified brokerage account. She opens an SBLOC with 75% advance on diversified equity, giving her $3 million of credit capacity. She draws $800,000 for a home purchase bridge at SOFR + 2.25% (current effective rate around 7.5%), then repays it after selling non-employer stock six months later.
Common mistake: maxing the advance rate against a concentrated single stock. A 20% stock decline can trigger a forced sale at the worst time.
SBLOCs matter at home purchase bridges, tax payment funding during restricted windows, and short-term liquidity without triggering capital gains.