A securities-backed line of credit (SBLOC) is a revolving line of credit that uses non-retirement accounts as collateral. SBLOCs allow you to access a portion of the value of your non-retirement accounts as loans without liquidating investments. Some of the possible perks include:
- Tax Savings - Avoids tax consequences from realizing capital gains.
- Market Participation - Allows investors to continue benefiting from dividends, interest, and appreciation.
- Low Interest Rates - Often offered at lower rates than other personal loan products.
- Flexible Use of Funds - Borrowed funds can be used for various purposes, such as real estate purchases, business investments, or large expenses - though SBLOCS do not permit buying additional securities or funding margin loans
- Access to Capital - Can leave the line of credit open and waiting for when it’s needed
