Securities Financing: Fund Deals Without Selling Your Stock

If you're a real estate investor sitting on a stock or crypto portfolio, you've probably run into this problem before. You need capital for your next deal, but your two obvious options both come with a cost. Sell the stock and you trigger a taxable event and give up all future upside on that position. Leave it alone and your capital stays locked up while you scramble to find funding somewhere else.

Conventional lending doesn't really solve this either. Personal loans come with monthly payments and a personal guarantee attached to you personally. Margin lines aren't built to handle restricted stock. There's a real gap between the capital you hold and the capital you can actually put to work, and most of the standard financing toolkit does nothing to close it.

That gap is exactly what securities financing is designed to fill, and it works in a way that's fundamentally different from anything else in a real estate investor's financing stack.

How Securities Financing Works

Instead of selling your shares, you pledge them into regulated custody under a control agreement. This typically happens through institutional custodians like BNY, JP Morgan, Citibank, State Street, or Fidelity. Once the shares are in custody, a lender advances cash against the collateral value of the position.

Your shares stay in your name the entire time. There's no sale event, so no taxable event either. Your position stays intact and keeps growing while the loan is outstanding.

A few important details on how the structure works:

• The loan is non-recourse, meaning the lender's only remedy if something goes wrong is the pledged shares themselves, not your other assets.
• Dividends paid on the stock typically go toward reducing the loan balance over time.
• Voting rights stay with you through proxy for the life of the loan.

The Numbers Investors Should Know

Here's what the terms typically look like:

• Unrestricted shares can qualify for up to 75% loan-to-value.
• Restricted or insider stock usually lands in the 30% to 50% LTV range.
• Loan sizes range from $50,000 up to $500 million or more, scaling with the size of your position.
• Rates typically run from 1.5% to 7% annually, interest only, paid quarterly.
• Terms come in three, five, seven, or ten year options, with early repayment available after two years.

Why It Stacks Differently Than Other Financing Tools

If you've used a credit-based financing stack before (things like debt consolidation, gap funding, credit cards, HELOCs, or business lines of credit), you know that applying for one tool can sometimes knock out your approval odds for another. These tools compete for the same lender approvals because they're all tied to your credit profile.

Securities financing doesn't play by those same rules. Because the underwriting is based entirely on the security itself rather than your credit profile, it can run in parallel with everything else in your financing stack. There's no FICO requirement, no real property required, and no business revenue requirement.

That means it doesn't compete for capital within your existing stack. It expands your total capital capacity instead.

A Real Deal Example

Here's how this plays out in practice. Say an investor holds a $600,000 public stock position and is working a fix and flip that needs both a down payment and rehab capital.

Using securities financing at 30% LTV against that $600,000 position unlocks $180,000 in cash, without selling a single share. That capital covers the rehab budget while the rest of the investor's financing stack handles the acquisition side, running side by side instead of competing for the same lender approval.

Who This Fits, and Who It Doesn't

Securities financing works well for:

• Accredited investors holding a meaningful stock or crypto position
• Company insiders holding restricted stock who can't sell on the open market

There are a few requirements to qualify, including a minimum daily trading value of $30,000 or more (calculated as price times 60-day average volume) and clear, disclosed ownership of the position.

It's not a good fit if:

• Your holdings are illiquid, thinly traded, or non-public
• You're unwilling to place shares into custody for the loan term
• You have no equity position outside of real estate

For investors who don't hold outside securities, the traditional credit-based stack remains the primary path.

The Bottom Line

A stock or crypto position doesn't have to sit on the sidelines while you go find financing elsewhere, and you don't have to sell it to put its value to work. Securities financing turns a portfolio you already hold into usable capital for your next deal, without a sale and without a credit check. Funding can often close in as little as 5 to 10 business days.

If you're holding a position and wondering how to unlock it without giving it up, this is worth exploring before your next deal.