Securities-Based Lending



Securities-based lending (SBL) lets you borrow cash using your publicly traded stock portfolio as collateral — without selling a single share. You keep ownership, you keep your market exposure (and any dividends), and you get liquidity to deploy elsewhere. For an accredited investor sitting on a large concentrated stock position, it’s often the cleanest way to fund an acquisition without triggering a taxable sale.

How it works

Your shares stay at a regulated custodian. The lender places a lien on the portfolio and advances a line of credit against it. You draw what you need, pay interest only on what you’ve drawn, and repay on your schedule (or at a defined term). The shares remain yours — you still benefit from appreciation and dividends; the lender just holds a security interest.

Conservative LTV bands

Lenders in this space are deliberately conservative. Loan-to-value bands typically sit below 80% — often well below, depending on the volatility of the underlying stock. A blue-chip, low-volatility portfolio might support a higher LTV; a single concentrated name with high beta will be capped much lower. The buffer is the lender’s protection against a market drop.

How margin calls work

This is the part that catches people out. If the portfolio’s value falls and the LTV breaches the lender’s threshold, you get a margin call. You then have a short window (often a few days) to do one of three things:

• Deposit more shares or cash to restore the LTV buffer.
• Pay down part of the loan to reduce the balance.
• Accept a partial liquidation — the lender sells some shares to bring the ratio back in line.

The risk is real: in a sharp downturn, a forced sale can lock in losses. That’s exactly why the LTV bands are conservative — the buffer exists so a normal market move doesn’t trigger a call. But concentrated, volatile positions are inherently riskier collateral.

SBL is cheap, flexible liquidity — until the market turns. The discipline is in the LTV buffer: borrow at 50% against a stable portfolio and a 30% market drop still doesn’t call you. Borrow at 75% against a single volatile name and a bad week can.

Who it’s for

• Accredited investors with $1M+ in unencumbered publicly traded shares.
• Shares held at a regulated custodian — not in a restricted or lock-up status.
• A use of funds that earns more than the line’s cost — funding an acquisition, a bridge, or a time-sensitive opportunity.

How it fits a capital stack

SBL is a liquidity layer, not an equity layer. It’s how an investor turns a paper portfolio into deployable cash to fund the equity portion of an acquisition — including a JV partner block. The shares stay invested; the borrowed cash goes to work in a real project; and the project’s returns are sized to cover the line’s interest with margin to spare.