What is securities-based lending?

Securities-based lending is the practice of borrowing money while using securities held in your after-tax investment accounts as collateral. Generally, these types of loans are made available by the larger banks and financial institutions, brokerages or advisory firms.

What is a securities based loan?

Securities-based lending provides capital to help people buy real estate, to purchase personal property, or to invest in a business. These kinds of loans are generally offered to high-net-worth individuals by large financial institutions and private banks.

What are examples of securities based lending?

Examples include stocks or other derivatives. While securities-based lending involves using securities as collateral for a loan, this kind of lending requires collateral in the form of cash or a letter of credit in exchange for the security in question. Securities lending normally doesn't involve individual investors.