Portfolio line of credit: How to borrow against your assets

A portfolio line of credit, also known as a securities-backed line of credit (SBLOC), lets you borrow money using the investments in your portfolio as collateral. Instead of selling your stocks, bonds, mutual funds, or ETFs to access cash, you borrow against their value and keep your investments in place.

It works similarly to a home equity line of credit, but instead of your home, your investment portfolio secures the loan. It's a revolving line of credit, so you can draw funds as needed, repay them, and borrow again, much like a credit card. You only pay interest on what you’re actively borrowing instead of the full balance available to you. 

Most lenders let you borrow between 50% and 95% of your portfolio's value, depending on the types of assets you hold and their volatility. Stocks and bonds typically qualify, while more exotic holdings like derivatives may not. Some institutions require a minimum portfolio value of around $100,000 to qualify.

One important restriction to keep in mind here: You generally can't use the funds to purchase additional securities. Beyond that, the money can go toward almost anything, from real estate purchases and home renovations to tax payments, tuition, or business expenses.

The key appeal is that your investments stay invested. You avoid triggering capital gains taxes that would come with selling, and your portfolio continues to grow while you access the liquidity you need. That said, borrowing against your portfolio isn't without risk, and it's important to understand what happens if the value of your collateral drops.

When you open an SBLOC, the lender establishes a loan-to-value (LTV) ratio. This ratio determines how much you can borrow relative to the value of your pledged assets. For example, a bank might allow you to borrow up to 50% of the value of diversified equity holdings or a higher percentage for more stable assets like high-grade corporate bonds.

Here’s how it works: 

• Pledged collateral: You maintain ownership of the securities and continue to receive any dividends or interest they generate.

• Revolving access: Much like a credit card or home equity line of credit (HELOC), you only pay interest on the amount you actually draw. 

• Interest-only payments: Many SBLOCs allow for interest-only monthly payments, providing significant flexibility in how you manage your cash flow.

Because these loans are secured by liquid assets, the application process is often faster than that of a mortgage or personal loan. 

Using an SBLOC can be a strategic move for high-net-worth individuals who need short-term liquidity. Portfolio lines of credit offer these benefits: 

• Tax efficiency: Selling stocks to fund a major purchase can trigger significant capital gains taxes. Borrowing against those same stocks provides cash while deferring those taxes.

• Lower rates: Because the loan is secured by liquid collateral, SBLOC interest rates are typically much lower than those of unsecured personal loans or credit cards.

• Continued market exposure: You don’ have to exit your positions to get cash. If the market rises, you still benefit from the appreciation of your pledged assets.

Borrowing against a volatile asset class like the stock market is not without significant risk.

Market volatility and maintenance calls

If the market value of your pledged securities drops significantly, your LTV ratio will rise. If it exceeds the lender's threshold, you may face a maintenance call (also called a “margin call”). 

If this happens, you either need to deposit more cash or pledge additional securities. If not, the lender may liquidate your assets to bring the account back into compliance. And to top it off, they may do so without prior notice. 

Variable interest rates

SBLOCs typically use variable rates based on a benchmark like the Secured Overnight Financing Rate (SOFR) plus a spread. As of early 2026, SOFR remains sensitive to Federal Reserve policy and market liquidity. 

This matters. If interest rates rise, your cost of borrowing increases, which can strain your monthly cash flow.

An SBLOC is typically utilized for short-term financing needs rather than long-term debt. Common use cases include:

• Bridge financing: Covering costs between the purchase of a new home and the sale of an old one, giving you financial flexibility while you wait for the equity. 

• Tax obligations: Paying a large, one-time tax bill without disrupting an investment strategy.

• Business capital: Investing in a business venture where traditional lending might be too slow.

For those who prioritize capital preservation and want to avoid the risks of market-linked borrowing, traditional federally insured savings products may be more appropriate.

A portfolio line of credit (SBLOC) offers an easy way to unlock the value of your investments for immediate needs without the tax consequences of a sale. However, the risk of forced liquidation during market downturns and the impact of variable interest rates require careful management. 

Before leveraging your assets, ensure you have a clear plan for repayment and enough of a "buffer" in your portfolio to withstand market fluctuations. 

At Raisin, we focus on helping you manage the liquid portion of your wealth through high-yield savings options that provide growth without the risk of a margin call. That way, your money can keep working for you. 

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.