The same dollar of collateral does not support the same loan everywhere. A lender's advance rate, the maximum percentage of a collateral's value it will lend against, depends heavily on one specific factor most people underweight: how concentrated that collateral actually is, not just what type of asset it is.
The general ordering, and why it's only an ordering
Across the industry, advance rates generally follow a rough hierarchy: Treasuries and high-grade bonds typically support the highest advance rates, diversified equity portfolios come next, and concentrated single-stock positions or alternative assets (private fund interests, art, aircraft) typically support meaningfully lower advance rates, sometimes none at all. This page states that as a directional ordering, not a specific table, because advance rates are not standardized by regulation the way, say, Regulation T's initial margin requirement is. Each lender sets, and in many cases does not publicly publish, its own schedule.
The one mechanism that is actually well documented: concentration risk
Interactive Brokers publishes a specific, concrete example of how concentration risk gets priced into an advance rate. Its margin requirements rise as a stock position grows relative to that company's total shares outstanding, reaching a full 100% margin requirement, meaning zero borrowing capacity against that specific position, once the position reaches 9% or more of shares outstanding for a stock, or 5% or more for an ETF.
This matters well beyond IBKR's specific numbers, because it illustrates the actual mechanism most lenders use in some form: it is not just "is this one stock or a diversified basket," it is "how large is this position relative to the total float of the underlying company." A $5,000,000 position in a large, liquid company represents a tiny fraction of shares outstanding and behaves, for lending purposes, much like ordinary diversified collateral. The same $5,000,000 position in a smaller company can represent a meaningful chunk of the entire company, and gets treated accordingly.
Advance rates can move without your collateral moving
A loan drawn comfortably within a lender's terms can move closer to trouble for reasons that have nothing to do with the collateral's price. If a lender revises its advance-rate schedule, tightens its concentration thresholds, or reclassifies a specific security, the maximum loan value against your existing collateral can shrink even while the market price hasn't. This is a real, underappreciated risk distinct from ordinary market-price risk, covered from the price-movement side on this site's margin-call mechanics guide.
What to ask your lender
See the current published all-in rate at each self-directed lender for your line size with the Spread and Tier Comparison calculator, track the market-wide benchmark spread for securities-based lending (SBL) over time on the SBL Spread Index, and run your own collateral mix through the Margin-Call Stress Test calculator to see the actual decline that would trigger a call.
- What is your specific advance rate for my actual collateral mix, not a general range, and can I have it in writing?
- Do you apply a concentration-based penalty similar to the shares-outstanding mechanism IBKR publishes, and if so, at what thresholds?
- Under what circumstances can you revise my advance rate after the loan is already outstanding, and how much notice do you provide before a revision takes effect?
- How does your advance rate for a diversified equity portfolio compare to your advance rate for investment-grade bonds or Treasuries within the same account?