An SBLOC margin call can force liquidation inside a US brokerage account that is visible to the IRS. A Lombard loan pledging assets in a properly structured offshore account gives the lender recourse to the collateral without triggering the same domestic reporting cascade.
Lombard Loan
A Lombard loan is a fixed or floating term loan secured against a pledged portfolio, typically offered by private banks in Switzerland, Luxembourg, Singapore, and the UK. The lender holds your securities as collateral and advances 50 to 90 percent of the portfolio value depending on asset class, with equities usually getting 50 to 70 percent and bonds or structured products getting higher. Rates in 2024 run roughly SOFR or SARON plus 0.5 to 1.5 percent for Tier 1 private bank clients, translating to approximately 5.5 to 7.5 percent all-in for USD borrowings. The structure suits borrowers who want a defined draw and repayment schedule, hold concentrated single-stock positions, or are routing the loan through an offshore entity as part of a buy-borrow-die play where annual cost certainty matters.
SBLOC (Securities-Backed Line of Credit)
An SBLOC is a revolving credit line secured by a non-retirement brokerage account, most commonly offered by US broker-dealers including Fidelity, Schwab, and Merrill Lynch through their private banking arms. You draw only what you need and pay interest on the outstanding balance, which makes it cheaper in periods of low utilization. Rates are typically benchmark plus a spread, often landing in the 5 to 7 percent range for balances above $1 million, but variable-only structures mean your cost floats entirely with the market. SBLOCs are operationally simpler and faster to establish, sometimes approved in days with no separate legal documentation, making them the default choice for US-based investors who want occasional liquidity rather than a structured multi-year borrow.
Key Structural Differences That Actually Matter
The core distinction is fixed term versus revolving access. Lombard loans at private banks can accommodate mixed collateral including alternatives, funds of funds, and insurance wrappers, which SBLOCs at retail brokerages typically cannot. Lombard structures also integrate cleanly with offshore holding companies, letting you pledge assets held in a Cayman or BVI entity rather than in your personal name. SBLOCs are US-centric by design: the account must sit at a FINRA-regulated firm and must be in your name or a revocable trust, which limits offshore planning options. For a detailed breakdown of how these structures compare across specific providers and rate tiers, see the best Lombard loan rates guide.
Which Structure Fits Your Situation
Use an SBLOC if you are a US resident with a standard brokerage account who needs occasional liquidity, prefers simplicity, and has no offshore entity in the picture. Use a Lombard loan if your portfolio exceeds $2 million, includes concentrated stock or alternative assets, sits inside an offshore structure, or if you want to chain multiple borrowings across jurisdictions as part of a longer-term estate compression strategy. Private banks in Geneva, Zurich, and Singapore offer the most aggressive Lombard terms for non-US persons, while Julius Baer, Pictet, and UBP are commonly cited for custom structures. The SBLOC wins on convenience; the Lombard loan wins on structural optionality.
Things people ask first.
Is a Lombard loan the same as an SBLOC?
They are functionally similar but structurally different. A Lombard loan is typically a term facility from a private bank, while an SBLOC is a revolving credit line from a broker-dealer. The collateral rules, eligible assets, and offshore compatibility differ significantly.
Which has lower interest rates, a Lombard loan or an SBLOC?
Rates are comparable in 2024, both generally landing in the 5 to 7.5 percent range for USD borrowings. Lombard loans at European private banks can price tighter for very large portfolios, particularly for clients holding bonds or structured products as collateral.
Can I use an SBLOC for offshore tax planning?
Not effectively. SBLOCs require the collateral account to sit at a US-regulated broker-dealer and are generally held in personal or revocable trust accounts, which limits their use in offshore entity structures.
What happens if my collateral drops and I get a margin call?
Both structures allow the lender to demand additional collateral or begin liquidation if the loan-to-value ratio breaches the threshold. Lombard lenders at private banks often give a phone call before liquidating; SBLOC automated systems can liquidate without prior notice depending on the broker's policy.
What is the minimum portfolio size for each?
Most SBLOC programs start at $100,000 to $250,000 in eligible securities. Lombard loans at European private banks typically require a minimum relationship of $500,000, with the most competitive terms reserved for portfolios above $2 million.
Can I pledge concentrated single-stock positions under either structure?
Lombard lenders often accommodate concentrated positions with a haircut, sometimes lending 40 to 50 percent against a single stock. SBLOCs at most retail brokerages apply strict concentration limits, often capping any single position at 10 to 25 percent of pledged collateral value.
Ready to structure your borrow properly across jurisdictions?
The Offshore Playbook maps out how Lombard loans, SBLOCs, and offshore entity structures fit together in a real buy-borrow-die execution, including which private banks actually deliver on their advertised terms and which to avoid.
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