Securities Based Line of Credit (SBLOC)


You’ve probably read about how the ultrawealthy borrow against their portfolio to avoid selling off assets and triggering big tax bills, but what you may not realize is that you may be able to do that as well!

Certain Brooklyn FI-managed brokerage accounts at TD Ameritrade may be eligible for an SBLOC. This is a lending solution available through TD Bank that allows you to borrow against your investments without actually selling off the underlying assets. 

The details:

  • How much can you borrow? Typically, you can borrow up to 30% of the account value. A $1,000,000 account would allow for a $300,000 line of credit.

  • What’s the setup process? The Brooklyn FI investment team will get an application started for you. TD Ameritrade works with their banking partner TD Bank to actually facilitate the loan. You will have to verify your identity and eligibility with the bank over the phone. The process takes about three weeks.

  • Are there minimums? Minimum credit line of $100,000, maximum line of $5M without additional underwriting. 

  • How can you spend it? Any (legal!) purpose except purchasing stock or margin. 

  • What’s the interest rate? It’s a variable rate + a fixed additional rate and is subject to change without notice with interest rate fluctuations.

  • How do I get the cash once the SBLOC is in place? Reach out to your Brooklyn FI advisor to make a withdrawal. Interest-only monthly payments are typically required.

  • Are there other limitations? You cannot withdraw funds from the pledged account once you have an SBLOC in place. A second brokerage account is typically opened to allow for deposits and withdrawals.

What are they good for?

SBLOCs, since they don’t have a fixed interest rate, are best for short-term financing issues - a major renovation, a down payment on a property, or to front-load cash from a pending liquidity event. They’re also great as a backup if you have unpredictable cash flow or income, or have a very high tax year and want to get cash without additional capital gains. 

We don’t recommend them as a substitute for a mortgage or home equity loan. 

Want to learn more and see if it makes sense to get one of your own? Reach out to your Brooklyn FI Advisor today.