How a Securities Backed Line of Credit Actually Works

A securities backed line of credit lets you access your money without selling a single investment.

Here's how a securities backed line of credit actually works:

Your brokerage account acts as collateral, allowing you to borrow against your portfolio value without triggering any capital gains taxes.

Credit lines typically range from 50-95% of your eligible securities value depending on the asset type. Stocks usually qualify for 50-70%, corporate bonds 70-85%, and treasury bonds up to 95%.

Interest rates are lower than credit cards or personal loans because the loan is secured by your investments. As of 2025, rates typically range from SOFR plus 1.75% to 4.40% depending on your credit line size.

You maintain ownership of your investments and continue receiving dividends while borrowing.

Common uses include real estate purchases, paying taxes, home renovations, or covering uneven cash flow without liquidating your portfolio.

But there's a catch 🚨

If the market drops and your portfolio value falls below required minimums, you'll face a margin call. You'll have 2-3 days to add more collateral or repay part of the loan, or the lender can sell your securities to cover the shortfall.

Sentient Financial is a state‑registered investment adviser in California. This post is for informational purposes only and is not an offer to buy or sell securities or to provide investment advice. Past performance does not guarantee future results.

Sentient Financial, LLC is a financial advisor serving working professionals (ages 40-65, $250K+ annual income), including sales professionals with variable income, C-suite executives, and small business owners seeking integrated business and personal planning.