Busting the myths: How securities-backed lending can help investors achieve their goals

Economic volatility may seem like the new normal for investors, but that doesn’t mean they are any less worried about its impact. According to a recent Advisor Authority survey from Nationwide, inflation (44%), the rising cost of living (23%) and taxes (19%) are investors’ biggest financial concerns over the next 12 months – and they are turning to advisors for solutions to help address them.

The good news? “Credit and loan management solutions, like securities-backed lending (SBL), can help investors address all three of those concerns,” said Debra Griffin, head of Nationwide’s SBL business. However, as SBL gains popularity, misunderstandings about its advantages and potential risks may cause confusion among clients.

“The SBL industry has seen significant growth over the last five years as investors seek out ways to access liquidity by leveraging their investment portfolios as collateral,” said Griffin. “Despite that growth, misunderstandings about the product persist, which is why it’s so important for advisors to educate their clients about solutions that may be right for them, including SBL.”

Here are a few common misperceptions about SBL that advisors can address with clients:

SBL is only for rich people

One of the most common SBL myths across the industry is that it is only for the wealthiest investors, Griffin said.

“While it’s true SBL used to be reserved for the ultra-wealthy, they have become much more accessible in recent years, now serving as a popular source for funding real estate purchases, education expenses and paying tax liabilities at a time when many of us are struggling with high costs,” said Griffin.

Lenders determine the value of a securities-backed line of credit (SBLOC) based on an investor’s portfolio, with the minimum amount needed to open one now much smaller than it was in the past. For example, Nationwide’s SBL solution, Nationwide Smart Credit, offers a $26,000 minimum line of credit, allowing more modest investors opportunities to meet their liquidity needs.

All debt is the same

“Many investors also believe they should avoid all debt, but not all debt is the same,” Griffin said. A SBLOC provides strategic liquidity, she explained, allowing investors to use their investments to access cash and potentially enhance their portfolios. Investors can use SBL to seize business opportunities, boost retirement income and manage estate planning needs. Unlike high-interest consumer debt such as credit cards or personal loans, SBL also offers flexible repayment options.

“Investors may believe other lending options, like credit cards or individual bank loans, may be more accessible or better options in the current environment, but SBL is a smart alternative right now,” Griffin said. “Advisors should talk to their clients about the lower interest rates available through SBL compared to traditional loans, home equity lines of credit or credit cards. SBLs also allow investors to avoid paying capital gains taxes when liquidating.”

SBL only makes sense in low-interest rate environments

Investors may also believe that SBL, like most credit and loan management solutions, only works well in low-interest rate environments.

“In fact, a SBLOC performs effectively in higher-interest rate environments like we’re experiencing right now,” Griffin said. “We’re also seeing interest rates start to decline, which will make them even more attractive.”

The Federal Reserve cut rates by 25 basis points last week for the second time this year, and Nationwide’s Office of Economics expects them to cut another 75 basis points by the end of 2026.

Loan paperwork is cumbersome and takes too long to complete

Another common myth Griffin said her team hears frequently is that loans in general take too long to process and provide access to cash when needed.

“Depending on the type of lender and how much information is needed for the application, funds can take weeks to be sent,” Griffin said. “However, the SBL industry is speeding up that timeline using digital, online processes and paperwork so investors have the cash they need when they need it.”

Some companies – like Nationwide – have made it so clients can access cash in as little as hours or days, Griffin explained.

“It’s important for advisors to talk with their clients to truly understand their goals so they can anticipate their needs and recommend solutions that fit their financial journey,” Griffin said. “While SBL comes with a lot of misconceptions, helping break those down with your clients can ensure they’re not missing out on a product that could help them – and position you as a trusted partner that can help them achieve their goals.”

Advisors who are looking for more information on securities-backed lending, including key benefits and advantages, can visit https://www.nationwide.com/financial-professionals/products/corporate-solutions/sbl.

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10/2025