SBLOC or Sell? How High-Net-Worth Households Borrow Against Their Portfolios

Borrow or Sell: The Short Answer

Borrowing against a portfolio solves a timing problem. It fits when the cash need is temporary, a dated source of repayment exists, and the portfolio can fall sharply without forcing a sale. Selling fits when the need is permanent, when a position is overdue for diversification, or when repayment depends on markets cooperating.

Most households should model four plans side by side: sell enough now, borrow the full amount, sell part and borrow less, or defer the expense. The third option is often the one that survives a bad market, and it is the one most often skipped. The test question for any loan is simple: what pays this off if the portfolio drops and the expected cash arrives late?

How Much High-Net-Worth Households Borrow

Among Long Angle members who borrow, loan size tracks wealth, with jumps at $5 million and $25 million. These medians cover every type of loan or credit line members reported, not SBLOCs alone, and they are not a recommended balance.

Source: Long Angle 2026 High-Net-Worth Financial Products Report, 165 respondents, fielded July 2026. Median of reported loan or credit line amounts among members who borrow, all loan types. US respondents only.

Members describe using lines as short-term liquidity: draw the funds, then repay when other cash arrives, such as proceeds from a stock sale. The full distribution, including loan types and lenders, is in our research finding on how high-net-worth households borrow against their portfolios.

What Members Borrow For

The most common reasons are buying a home and making another large purchase, not leveraging the portfolio itself.

Source: Long Angle 2026 High-Net-Worth Financial Products Report, 165 respondents, fielded July 2026. All loan types. Borrowers could select more than one purpose, so shares total more than 100%. US respondents only.

Two rows are specific to people with private investments and concentrated wealth: one in five borrowers used a loan to pay taxes, and 15% to meet capital calls. Those figures describe what members did across all loan types. They do not show that a standard SBLOC permits either use; the section on permitted uses below covers that.

What an SBLOC Is

A securities-based line of credit, or SBLOC, is a revolving loan secured by the investments in a brokerage account. You keep the holdings invested and the lender takes a pledge on the account. Schwab calls its version a Pledged Asset Line; Fidelity arranges lines through third-party banks. Interest is charged only on what you draw, and most lines require monthly interest payments with principal due when you repay.

Three numbers are easy to confuse. Market value is what the investments are worth. Lending value is what the lender recognizes after excluding ineligible holdings and applying advance rates. The balance is what you have borrowed. A $2 million portfolio, a $1 million approved line and a $200,000 balance are three different things.

An SBLOC is one of several ways members borrow. Portfolio lines and margin loans are held in close to equal measure:

Source: Long Angle 2026 High-Net-Worth Financial Products Report, 165 respondents, fielded July 2026. Borrowers could select more than one type, so shares total more than 100%. US respondents only.

A margin loan sits inside the brokerage account, can fund securities purchases, and can also be drawn as cash. An SBLOC cannot be used to buy securities. Compare the two as written proposals rather than assuming a bank line is the safer product.

How Much You Can Borrow, and How Much to Draw

Lending value depends on what you hold. A 2015 SEC and FINRA investor alert gives typical advance rates of 50% to 65% for stocks, 65% to 80% for corporate bonds and 95% for US Treasuries. Those are educational ranges, not a quote; each lender sets its own.

Source: Hypothetical illustration using the low end of the SEC and FINRA advance-rate ranges (Investor Alert, December 21, 2015). Assumes every holding is eligible.

Not everything counts. Schwab and Fidelity both exclude retirement assets, and lenders decide at their discretion which securities qualify. Founders and executives should ask specifically about concentrated positions, restricted or control stock and private shares, which often receive little or no lending value on a standard line. A household with $15 million of net worth may have only a few million of eligible collateral once the business, real estate and retirement accounts are set aside.

The approved line is a ceiling, not a recommendation. Set the balance from a stress test instead: planned debt should stay below the lending value you would have after a severe decline, minus a reserve. On a $3 million portfolio, a $300,000 draw starts at 10% of market value and rises to about 17% after a 40% decline. A $1.5 million draw starts at 50% and rises to 83%.

What Happens to an SBLOC if the Market Drops

The loan does not shrink when the collateral does. The hypothetical below assumes a $3 million portfolio, a $900,000 balance and a 50% lending value throughout:

Source: Hypothetical illustration. Ignores accrued interest, fees and differences in advance rates between holdings.

At a 50% decline, the borrower faces a maintenance call. The SEC and FINRA alert says the window to respond is typically two or three days. The cure comes in three sizes, which is why the plan has to exist before the call does:

• Repay $150,000 in cash from outside the pledged account.
• Pledge $300,000 of additional eligible securities at a 50% advance rate.
• Sell $300,000 of pledged securities, because each dollar sold also removes 50 cents of lending value.

Two further risks compound the first. A lender can cut advance rates in a falling market, so capacity can shrink faster than prices. And the lender controls the sale: Schwab describes its Pledged Asset Line as uncommitted, says it may demand full repayment at any time for any reason, and determines eligible collateral and loan value at its sole discretion. If you cannot meet a call, the lender can sell holdings of its choosing, which may also trigger capital gains tax.

What You Can and Cannot Use an SBLOC For

An SBLOC is a non-purpose loan: the proceeds cannot buy securities. Typical uses are real estate, renovation, tuition, taxes and business needs. The written agreement controls the details, and some restrictions go further than people expect. Schwab's terms, for example, bar using Pledged Asset Line proceeds to buy securities or spot cryptocurrency, to pay down margin loans, or to deposit into any brokerage account.

Capital calls deserve particular care. Whether a private fund call is a permitted use depends on the fund, the investment and the lender's terms, so describe the exact transaction and get the lender's confirmation in writing before you draw. If it is not permitted, fund the call another way. Never route proceeds through another account to change how the use appears.

What an SBLOC Costs Today

Rates float at a spread over SOFR, and the spread narrows as the line grows. Schwab publishes its schedule:

Source: Charles Schwab Bank, Pledged Asset Line rates, SOFR as of October 19, 2026, read October 27, 2026. Rates exclude Investor Advantage Pricing discounts of 0.25% to 1.00% based on qualifying assets at Schwab. Lines begin at $100,000.

Schwab reserves the right to change the spread after a line is open, not only the SOFR component. Fidelity says its clients typically pledge at least $500,000, and that its lines carry no application, origination, annual or repayment fees. Our portfolio loan rate comparison sets these against margin and property-backed loans.

Budget at a higher rate as well as today's. Every two percentage points adds $10,000 a year on a $500,000 balance. And weigh the whole relationship: a rate discount that requires moving assets to a manager charging more elsewhere can cost more than it saves.

Borrowing Against Your Portfolio Instead of Selling: The Math

Borrowing defers the tax on a sale; it does not erase it. A hypothetical shows the trade:

• You need $500,000 and hold stock worth $500,000 that cost $100,000. Selling all of it realizes a $400,000 long-term gain. At the top federal rates of 20% plus the 3.8% net investment income tax, that is $95,200 of federal tax before any state tax, which leaves you short. To net the full $500,000 you would need to sell about $617,600.
• Borrowing $500,000 on Schwab's $500,000-to-$1 million tier at 7.27%, before relationship discounts, costs about $36,350 a year in interest.
• If you repay in a year from a bonus, a distribution or a planned sale, borrowing cost about $36,350 and the tax is still owed whenever you sell. If the loan stays open five years, the interest is about $181,750, and the tax still comes due unless the shares are held until death.

So borrowing is cheapest when the loan is short and the repayment source is already dated. A partial sale plus a smaller loan often splits the difference: it pays some tax now, keeps the balance well inside the stress budget, and shortens the time the loan stays open.

Watch for drift. Drawing $100,000 a year for five years without repaying principal leaves a $500,000 balance, and at 7% the fifth year's interest alone is $35,000. A line used for ongoing spending is a growing liability, not a bridge.

Which Lenders High-Net-Worth Borrowers Use

Brokerages lead portfolio lending for this group. Schwab and Fidelity are the two most used lenders among members who borrow, and most of their borrowers would recommend them.

Source: Long Angle 2026 High-Net-Worth Financial Products Report, 165 respondents, fielded July 2026. All loan types. * Low respondent count; read with caution. Borrowers could use more than one lender. US respondents only. Frec is a Long Angle partner, and Long Angle receives referral fees from some partners.

J.P. Morgan clients reported the largest lines by far, though from a small number of respondents. A recommendation rate measures service, not price: a Schwab borrower and a Fidelity borrower each described their rates as noncompetitive. One member's advice for anyone opening a line was two words: shop lenders. Get written proposals from your current custodian and at least two others, on the same holdings and the same requested amount. Our guide to high-net-worth lending covers the other loan types.

Buy, Borrow, Die: What the Strategy Leaves Out

Buy, borrow, die describes holding appreciated assets for life, borrowing against them for spending, and leaving them to heirs. Under section 1014 of the tax code, inherited property generally takes a basis equal to its value at death, so gains built up during the owner's life are not taxed as income. The basis can also step down if the asset has fallen in value.

The tax rule does not make the debt disappear. The loan is still repaid from the estate, interest compounds for as long as it is open, and every maintenance call along the way is a chance for a forced sale that defeats the point. Many lines are full-recourse, so the borrower is responsible for any shortfall regardless of collateral value. Treat the phrase as a description of a tax rule, not a financing plan, and run any version of it past a tax advisor and an estate attorney.

Questions to Ask Before You Sign or Draw

• Can you confirm in writing that my intended use, described exactly, is permitted?
• Which of my holdings count, at what advance rate, and how are concentrated, restricted and private positions treated?
• Is the line committed or uncommitted, and what can you change without notice: advance rates, spreads, eligible collateral?
• At what account value does a maintenance call trigger, how long do I have, and can you sell without contacting me?
• What fees apply to the undrawn and drawn line, and what discount applies to my assets with you?
• Can I trade, rebalance or withdraw dividends from the pledged account, and what happens if I move firms?
• If a trust or LLC owns the assets, who is the borrower, who is the pledgor and who is personally liable?
• Who is compensated if I borrow rather than sell, and how?