How liquid asset secured financing helps with cash flow

June 02, 2022

Liquid asset secured financing puts cash at your disposal for greater financial flexibility. Here’s how this investment strategy works.

Expenses can occur at any time, planned or unplanned. While there are numerous ways to meet your liquidity requirements, liquid asset secured financing can be a great option, especially during times of economic uncertainty and volatility. You can leverage the assets in your portfolio by pledging them as security for a revolving line of credit. With this strategy you can quickly and easily access cash for a wide range of purposes without having to liquidate your market positions.


Flexible financing secured by investment assets

Liquid asset secured financing is a flexible line of credit that’s secured by eligible assets in one or more of your investment accounts. Leveraging securities without liquidating investments can give you more flexibility to meet a wide range of financial needs and challenges.

“In the current market environment, it’s becoming more important to not have to liquidate investment assets,” says Cindy Luckman, senior vice president and managing director for U.S. Bank Wealth Banking Services. “Liquid asset secured financing provides clients with greater liquidity and overall financial flexibility.”

According to Luckman, client interest in liquid asset secured financing grew in the weeks after the coronavirus crisis sparked unprecedented market volatility. “With this tool, clients who need cash don’t have to be forced out of the market at a time when the value of their portfolio has declined,” she explains.

Alan Markarian, senior vice president and national manager of U.S. Bank Investment Advisor Services, gives an example: “Suppose a client needs cash to close on a new home next week, but her portfolio is down double-digits due to the recent market selloff. She believes the economic downturn will be short-lived and the market will bounce back, so she doesn’t want to have to sell securities at a loss.

“Liquid asset secured financing would allow the client to pledge the assets in her portfolio as collateral for a loan to generate the cash she needs, instead of selling securities at a loss,” he adds. “By leaving her portfolio intact, she can take advantage of a market rebound if and when one occurs.”


How can you use the cash from liquid asset secured financing?

You can use the cash you borrow to meet a wide range of financial needs. For example, Luckman says she has worked with clients recently who used liquid asset secured financing to accomplish the following:

  • A commercial real estate investor borrowed money to purchase and renovate an apartment building.
  • A small business owner borrowed money to meet working capital needs and cover payroll due to a sales slowdown caused by the coronavirus crisis.

“Another common strategy is using liquid asset secured financing as a bridge loan when buying a home,” says Luckman. “For example, you can borrow money to pay cash for the home and then convert to a mortgage later. This can be a smart strategy when mortgage interest rates are historically low like they are now.”

Paying estimated taxes, managing short-term cash flow, financing special purchases and refinancing higher-interest-rate debt are other reasons you might use liquid asset secured financing to generate cash.

Applying for a liquid asset secured financing line of credit is both fast and easy. Neither personal financial statements nor tax returns are required for credit lines up to $5 million. “We can sometimes get clients approved in a few days so they can move quickly to cover unexpected expenses or take advantage of opportunities,” says Luckman.

When talking to banks about liquid asset secured financing, Luckman suggests asking about setup fees, repayment terms and funds availability. “You want to have on-demand access to funds, and flexibility when it comes to repaying principal,” she says. 


Understand the potential risks of liquid asset secured financing

There are potential risks involved in a liquid asset secured financing investment strategy that are important to understand — especially during times of high market volatility. Specifically, a drop in the value of pledged securities could result in a margin call and the forced sale of securities at a loss.

Markarian says that when this occurs with a liquid asset secured financing line of credit at U.S. Bank, the bank works closely with clients to resolve the situation and bring the account back into margin with as little disruption to the portfolio as possible. 

“We realize that this situation can impact our clients’ financial and investment plans, so we don’t just start selling securities at random,” he says. “Instead, we communicate with our clients and their financial advisors to minimize the potentially negative financial impact on our clients.”

If you need cash to meet financial needs or capitalize on opportunities, consider leveraging, instead of liquidating, your investment portfolio with liquid asset secured financing. 


At U.S. Bank, we provide innovative and customized solutions to support your investment strategies. Contact us to learn more about how liquid asset secured financing could fit into your financial planning.

Related content

Resources for managing financial matters after an unexpected death

ABL mythbusters: The truth about asset-based lending

Your quick guide to loans and obtaining credit

Can ABL options fuel your business — and keep it running?

How to improve your credit score

Do I need a financial advisor?

4 questions to ask before you buy an investment property

Decoding credit: Understanding the 5 C’s

Collateral options for ABL: What’s eligible, what’s not?

How much money do I need to start investing?

How do interest rates affect investments?

Good debt vs. bad debt: Know the difference

Gifting money to adult children: Give now or later?

U.S. Bank asks: What do you know about credit?

Financial steps to take after the death of a spouse

ETF vs. mutual fund: What’s the difference?

Effects of inflation on investments

Can fantasy football make you a better investor?

Bull and bear markets: What do they mean for you?

A guide to tax diversification and investing

A beginner's guide to investing

6 tips for trust fund distribution to beneficiaries

Improving your credit score: Truth and myths revealed

5 questions to help you determine your investment risk tolerance

4 times to consider rebalancing your portfolio

4 strategies for coping with market volatility

4 major asset classes explained

What type of loan is right for your business?

Leverage credit wisely to plug business cash flow gaps

What are alternative investments?

7 diversification strategies for your investment portfolio

What’s a subordination agreement, and why does it matter?

4 questions you should ask about your custodian

Is online banking safe?

How liquid asset secured financing helps with cash flow

How to open and invest in a 529 plan

Hybridization driving demand

Should you get a home equity loan or a home equity line of credit?

OCIO: An expanding trend in the investment industry

Year end tax planning tips

Investing myths: Separating fact from fiction in investing

Renewing your custody contracts? Negotiate the fees.

How grandparents can contribute to college funds instead of buying gifts

5 unique ways to take your credit card benefits further

Key considerations for launching an ILP

Interval funds find growing popularity

A first look at the new fund of funds rule

Private equity and the full-service administrator

ESG-focused investing: A closer look at the disclosure regulation

How to choose the right custodian for your managed assets

4 benefits of independent loan agents

How to establish your business credit score

The unsung heroes of exchange-traded funds

How to establish your business credit score

Common unexpected expenses and three ways to pay for them

4 small business trends that could change the way you work

Capitalizing on growth in the private equity space

Start a Roth IRA for kids

Alternative assets: Advice for advisors

When small companies buy big: The potential of asset-based lending

Employee benefit plan management: trustee vs. custodian

Protecting cash balances with sweep vehicles

How institutional investors can meet demand for ESG investing

At your service: outsourcing loan agency work

Streamline operations with all-in-one small business financial support

Common small business banking questions, answered

3 signs it’s time for your business to switch banks

Retirement expectations quiz

Retirement income planning: 4 steps to take

What Is a 401(k)?

5 financial benefits of investing in a vacation home

Understanding yield vs. return

How to start investing to build wealth

What type of investor are you?

Investment strategies by age

How to build credit as a student

What’s your financial IQ? Game-night edition

How to choose the right rewards credit card for you

5 tips to use your credit card wisely and steer clear of debt

5 tips to use your credit card wisely and steer clear of debt

5 steps to selecting your first credit card

7 steps to keep your personal and business finances separate

Know your debt-to-income ratio

How to use credit cards wisely for a vacation budget

Dear Money Mentor: How do I begin paying off credit card debt?

4 ways to free up your budget (and your life) with a smaller home

Get more home for your money with these tips

Money Moments: How to finance a home addition

These small home improvement projects offer big returns on investment

Webinar: Mortgage basics: How much house can you afford?

Webinar: Mortgage basics: How does your credit score impact the homebuying experience?

Is a home equity line of credit (HELOC) right for you?

How to use your home equity to finance home improvements

Can you take advantage of the dead equity in your home?

10 uses for a home equity loan

6 essential credit report terms to know

Myth vs. truth: What affects your credit score?

Credit: Do you understand it?

How to build and maintain a solid credit history and score

Should you give your child a college credit card?

What types of credit scores qualify for a mortgage?

What is a good credit score?


 U.S. Bank does not guarantee the products, services, or performance of its affiliates and third-party providers.

U.S. Bank Global Fund Services is a wholly owned subsidiary of U.S. Bank N. A. Custody and lending services are offered by U.S. Bank N.A. U.S. Bank Global Fund Services (Ireland) Limited is registered in Ireland with the Companies Registration Office Reg. No. 413707 and Registered Office: 24-26 City Quay, Dublin 2, Ireland. U.S. Bank Global Fund Services (Ireland) Limited is authorised and regulated by the Central Bank of Ireland under the Investment Intermediaries Act, 1995 U.S. Bank Global Fund Services (Guernsey) Limited is licensed under the Protection of Investors Law (Bailiwick of Guernsey), 1987, as amended by the Guernsey Financial Services Commission to conduct controlled investment business in the Bailiwick of Guernsey.

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.