What Is LTV
Loan-to-value: the fundamental calculation
Loan-to-value (LTV) ratio is the percentage of your portfolio's market value that a lender will extend as credit. If your portfolio is worth $1 million and the lender assigns a 60% advance rate, your maximum credit line is $600,000.
The advance rate varies by asset type because lenders assess how quickly a security could lose value before they can liquidate it. Stable, liquid assets get higher rates. Volatile, concentrated, or illiquid assets get lower rates — or may not qualify at all.
"Your borrowing power is not determined by your portfolio's total value — it's determined by what you own, how concentrated it is, and how volatile the lender considers each holding."
Advance Rate Table
What different assets are worth as collateral
Below are typical advance rates offered by major lenders for securities-backed credit lines. These are representative ranges — actual rates vary by institution, account size, and specific securities held:
| Asset Type | Typical Advance Rate (% of Market Value) |
|---|---|
| U.S. Treasury bonds (short-term) | 90–95% |
| U.S. Treasury bonds (long-term) | 80–90% |
| Investment-grade corporate bonds | 70–85% |
| Municipal bonds (high-grade) | 65–80% |
| Broad-market ETFs (SPY, VTI, QQQ) | 65–80% |
| Sector ETFs (XLK, XLF) | 55–70% |
| Large-cap stocks (AAPL, MSFT, JNJ) | 60–75% |
| Concentrated position (single large-cap) | 50–65% |
| Concentrated position (single mid/growth) | 40–55% |
| Small-cap stocks | 30–50% |
| High-yield (junk) bonds | 40–60% |
| International stocks/ETFs | 50–65% |
| Mutual funds (diversified equity) | 50–70% |
| Penny stocks / OTC securities | 0% (ineligible) |
| Options contracts | 0% (ineligible) |
| Restricted/lockup shares | 0% (ineligible until unrestricted) |
Concentration Penalty: Even if an individual stock (like Apple) qualifies for 60–75% as part of a diversified portfolio, a concentrated position where that single stock represents more than 50% of your collateral may be capped at 40–55%. The concentration penalty can reduce your effective borrowing power by 20–30%.
Examples
How much different portfolios can borrow
Let's compare borrowing power across three common portfolio profiles:
| Portfolio ($1M Total) | Advance Rate | Max Credit Line |
|---|---|---|
| 100% S&P 500 ETF (VOO) | 70–80% | $700,000–$800,000 |
| 70% ETFs + 30% bonds | 72–82% | $720,000–$820,000 |
| 100% single stock (GOOGL) | 50–60% | $500,000–$600,000 |
| 100% single stock (TSLA) | 40–50% | $400,000–$500,000 |
| 50% NVDA + 50% cash/bonds | 60–70% | $600,000–$700,000 |
Same $2M Net Worth — Different Borrowing Power
$2M in Single Tech Stock
$800K–$1.1M
Maximum credit at 40–55% advance
Concentrated position penalized for volatility and gap risk. A single earnings miss or sector rotation could evaporate 30–50% of collateral value in weeks.
$2M Diversified (ETFs + Bonds)
$1.4M–$1.6M
Maximum credit at 70–80% advance
Diversified portfolio receives premium advance rates because the lender faces far less liquidation risk. The portfolio is unlikely to decline more than 25–30% even in severe bear markets.
The Diversification Premium: Diversification doesn't just reduce investment risk — it directly increases your borrowing power. A $2M diversified portfolio may have 40–60% more borrowing capacity than the same dollar amount in a single stock.
How Lenders Think
What determines your advance rate
Lenders run internal models that consider several factors when setting your advance rate:
Historical volatility
How much has this security moved in the past? Stocks with 30-day volatility above 40% (like Tesla or meme stocks) receive lower rates than stocks with 15–20% volatility (like Procter & Gamble).
Liquidity and average daily volume
Can the lender liquidate quickly if needed? Securities trading millions of shares daily receive higher rates than thinly-traded names. The lender needs to sell without moving the market significantly.
Concentration and correlation
How much of your portfolio is in a single name or correlated sector? The more concentrated, the lower the advance rate — because a sector-specific event could hit your entire collateral simultaneously.
Gap risk (overnight/weekend exposure)
Could this stock gap down 20%+ on news before markets open? Stocks with binary event risk (biotech, pre-earnings tech) may receive haircuts beyond what historical volatility alone would suggest.
Portfolio size and relationship value
Larger portfolios and long-standing client relationships may receive slightly better advance rates — lenders value the full relationship, not just the lending margin.
The Embark Strategy
Diversify Without Selling Your Stock
Engineers at Google, Meta & Apple use Embark’s IRS 721 strategy to unlock income and diversification from concentrated positions — with no taxable event.
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Maintenance LTV
The threshold that triggers margin calls
Your initial advance rate determines how much you CAN borrow. Your maintenance requirement determines when you MUST act. These are different numbers — and the gap between them is your safety cushion.
| Concept | What It Means |
|---|---|
| Initial advance rate (e.g., 70%) | Maximum you can borrow at the start |
| Maintenance requirement (e.g., 30% equity) | Minimum equity you must maintain in the account |
| Margin call trigger | When your equity falls below maintenance level |
| Liquidation point | When lender sells assets to restore ratios |
Example: You have a $1M portfolio, borrow $600,000 (60% LTV). Your equity is $400,000 (40%). If maintenance requires 30% equity, a market decline to $857,000 triggers a call — because equity ($257,000) would be below 30% of portfolio value. That's only a 14.3% market decline from starting point.
The Danger of Borrowing Near Maximum: If you borrow at 70% advance and maintenance is at 30% equity, a decline of just 14–20% can trigger a margin call. Conservative borrowers target 30–40% LTV specifically to create a buffer that can absorb a 30–50% market decline without triggering forced action.
Specific Stocks
Advance rates for popular concentrated positions
Tech employees and executives frequently ask about borrowing against specific stocks. While exact advance rates are proprietary to each lender, here's a general framework based on each stock's volatility profile:
| Stock | Approximate Advance Rate (Concentrated) |
|---|---|
| Apple (AAPL) | 55–65% — large-cap, lower volatility |
| Microsoft (MSFT) | 55–65% — stable, diversified revenue |
| Alphabet/Google (GOOGL) | 50–60% — moderate volatility |
| Meta (META) | 45–55% — higher volatility history (64% decline in 2022) |
| Amazon (AMZN) | 50–60% — large-cap but cyclical |
| Nvidia (NVDA) | 40–55% — high growth, high volatility |
| Tesla (TSLA) | 35–50% — extreme volatility, gap risk |
These estimates assume a concentrated position (single stock representing 50%+ of collateral). If the same stock represents only 10–20% of a diversified portfolio, it would receive a higher effective advance rate because the portfolio's overall risk is lower.
Maximize LTV
How to increase your borrowing power
If you need more borrowing capacity than your current portfolio provides, these strategies can help — though each involves trade-offs:
Diversify a portion of your portfolio
Moving 30–40% of a concentrated position into broad-market ETFs can significantly increase your overall advance rate — but triggers capital gains on the shares sold.
Add high-quality fixed income
Treasuries and investment-grade bonds receive 80–95% advance rates. Adding $200K of bonds to a $1M stock portfolio could increase total borrowing capacity by $160K–$190K.
Move to a larger lender with better rates
Major banks and wirehouses often offer better advance rates for $1M+ relationships than retail brokerages. Goldman Sachs, Morgan Stanley, and JP Morgan private banking may provide 5–10% higher advance rates.
Consolidate accounts
A single $2M account typically receives better advance rates than two $1M accounts at different institutions. Consolidation demonstrates the full relationship value.
The irony: the steps that increase your borrowing power (diversification, adding bonds) are often the same steps that reduce your need to borrow. A diversified portfolio generates more consistent returns and provides more natural liquidity options.
Beyond Borrowing
When borrowing power isn't the right metric
If you're focused on maximizing LTV, you're optimizing for debt capacity. But for many concentrated stock holders, the better question is: how much income can this position generate without borrowing at all?
The Embark Approach
10%+ Income on Full Position
No advance rate reduction — your entire position generates yield
No LTV Monitoring Required
You're not borrowing, so market declines don't trigger calls
Tax-Deferred Contribution
§721 in-kind transfer avoids the capital gains that diversifying would trigger
Full Position Participation
Keep exposure to upside while generating income from the holding
A $1 million concentrated position at Embark's 10%+ target generates $100,000+ in annual income. That same $1 million, if pledged as collateral (40–60% advance), gives you $400,000–$600,000 of borrowing capacity — but at 5.5–6.5% interest, costing you $22,000–$39,000 per year. One approach pays you. The other costs you.
FAQ
Loan-to-value questions answered
How much can I borrow against stocks?
Typically 50–80% of your portfolio's market value, depending on the types of securities held. Diversified ETFs and bonds receive higher advance rates (65–95%). Concentrated single stocks receive lower rates (40–65%). The exact amount depends on your lender, portfolio composition, and account size.
Can I borrow against ETFs?
Yes. Broad-market ETFs like SPY, VOO, VTI, and QQQ are among the best collateral for securities-backed lending. They typically receive 65–80% advance rates due to high liquidity and diversification. Sector or thematic ETFs receive slightly lower rates (55–70%).
Why do some stocks have lower borrowing limits?
Lenders assign lower advance rates to stocks with: (1) higher historical volatility, (2) lower trading volume/liquidity, (3) greater gap risk (overnight price swings), (4) higher concentration in your portfolio, and (5) sector-specific binary risk factors.
What loan-to-value is conservative?
Most financial advisors consider 30–40% LTV conservative for securities-backed lending. At this level, your portfolio would need to decline 40–55% before triggering a margin call — providing substantial cushion against even severe bear markets.
Can I borrow against Treasury bonds?
Yes, and Treasuries offer the highest advance rates of any collateral type — typically 80–95%. This is because U.S. government bonds have essentially zero credit risk and high liquidity. Adding Treasuries to a portfolio significantly increases borrowing power.
Securities-Backed Lending Series
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Beyond Borrowing Power
Earning Power > Borrowing Power
A concentrated stock position may only qualify for 40–60% LTV when pledged as collateral. That same position in Embark's §721 SPV can target 10%+ annual income — without the debt, margin risk, or capital gains trigger.