SBLOCs, EVA, and Smarter Liquidity
SBLOCs, EVA, and Smarter Liquidity
introduction:
Most financial advice about liquidity sounds the same: “Keep 3–6 months of expenses in cash.” But for high-income individuals, business owners, and nonprofits with significant reserves, that advice creates an opportunity cost. There’s a smarter way to access liquidity—without liquidating assets.
What Is an SBLOC?
A Securities-Backed Line of Credit (SBLOC) allows you to:
Borrow against your investment portfolio
Access capital without selling investments
Maintain growth potential while gaining flexibility
Used wisely, an SBLOC can provide near-instant access to capital at low interest rates, backed by your non-retirement investment accounts.
How It Boosts EVA (Economic Value Added)
EVA = NOPAT – (Invested Capital × WACC)
An SBLOC helps:
Maintain NOPAT: Assets continue compounding instead of being sold
Reduce WACC: Borrowing at low interest instead of raising equity or tapping expensive debt improves your capital efficiency
Strategic Use Cases
Business owners needing quick liquidity for expenses or inventory
Individuals bridging expenses without selling assets
Foundations or nonprofits managing cash flow while preserving investment returns
What to Watch Out For
Over-borrowing can trigger a margin call during market downturns
It’s important to match drawdown plans with repayment capacity
Conclusion
SBLOCs offer a bridge—not a crutch. Used correctly, they unlock smarter liquidity and improve your total financial efficiency.
