A securities-based line of credit (SBLOC) is a revolving line of credit secured by a pledged portfolio of stocks and bonds, which lets the owner borrow against investments without selling them and without triggering capital gains tax.
In plain terms
If you need $2 million and hold $10 million of appreciated stock, selling costs you tax. Pledging the stock as collateral and borrowing the $2 million does not, because a loan is not income. You keep the portfolio, keep the upside, keep the dividends — and owe interest. Every large brokerage sells a version of this, under a different name: a pledged asset line at Schwab, a liquidity access line at Morgan Stanley, a securities-backed line of credit at Fidelity.
How it works
The borrower pledges eligible securities in a non-retirement account. The lender sets an advance rate — the fraction of the portfolio’s value it is willing to lend against — which varies by asset type: high for Treasuries, moderate for a diversified equity portfolio, low or zero for a single concentrated position or a thinly traded stock. The line is revolving and usually interest-only, with no fixed repayment schedule.
The critical mechanic is the maintenance call. If the portfolio falls in value, the loan-to-value ratio rises past the lender’s threshold, and the borrower must post cash or additional collateral within days. If they cannot, the lender sells the securities — at its discretion, in a falling market, and with the resulting capital gains tax landing on the borrower. This is the risk the marketing brochures underplay: the collateral and the source of repayment are the same asset, so both fail at the same time.
Retirement accounts cannot be pledged. Interest is generally not deductible unless the proceeds are traceable to a taxable investment use.
The numbers
- Typical rate (mid-2026): roughly 5.8%–8%, quoted as SOFR plus a spread. With SOFR near 4.3%, spreads run from about 1.3 percentage points for the largest balances to 3.5 or more for small ones.
- Advance rate: commonly 50%–90% of portfolio value; up to ~95% for all-cash or Treasury collateral, and often 0% for restricted or concentrated single-stock holdings.
- Prudent utilization: advisors typically suggest borrowing well under the maximum — often 20%–30% of portfolio value — precisely so a market drawdown does not trigger a call.
- Setup cost: usually none. No origination fee, no appraisal, no fixed term.
What people get wrong
That the rate is the main variable. It is not; the advance rate and the call threshold are. A line priced 50 basis points cheaper but with a tighter maintenance trigger is the worse product, because the failure mode is not paying too much interest — it is a forced sale at the bottom of a drawdown, which converts an unrealized loss into a realized one and hands the borrower a tax bill on top. The second misconception is that these lines are exotic. They are among the most heavily marketed products in private banking, and the pitch is aimed squarely at households that would otherwise sell.
Related
Read more: Borrowing Against Wealth: Why the Rich Often Use Debt · Private Banking: Services, Perks, and What It Really Means · Liquidity: How Much Cash the Wealthy Actually Keep
See also: Buy, borrow, die · Concentrated position · Liquid net worth