Securities Based Lending (SBLOC) is the practice of borrowing funds while using securities held in your after-tax investment accounts as collateral. These loans are made available by larger banks and financial institutions. The interest rate is typically lower than other forms of credit and is based on the short-term index such as London Interbank Offered Rate (LIBOR) plus a spread determined by your loan amount.
An SBLOC can provide easy access to capital, enabling the borrower to avoid having to sell securities in order to access funds. Examples of uses include:
Investing in a business
Expanding a business
Short-term capital expenses
Interest in a business partnership
Liquidity for estate planning
Startup seed funding