Finder maintains full editorial independence to ensure for our readers a fair assessment of the products, brands, and services we write about. That independence helps us maintain our reader's trust, which is what keeps you coming back to our site. We uphold a rigorous editorial process that ensures what we write and publish is fair, accurate, and trustworthy — and not influenced by how we make money.
We're committed to empowering our readers to make sound and often unfamiliar financial decisions.
We break down and digest information information about a topic, product, brand or service to help our readers find what they're looking for — whether that's saving money, getting better rewards or simply learning something new — and cover any questions you might not have even thought of yet. We do this by leading with empathy, leaning on plain and conversational language that speaks directly, without speaking down.
For investors holding stocks with no immediate plans to sell, stock lending can be a lucrative way to generate extra income while maintaining your portfolio. While stock lending provides additional income for investors, borrowers can use the shares for short selling, covering trade settlements or as collateral for loans in margin accounts. These securities can then be re-lended to other investors or used for short sales or a failure-to-deliver situation. A failure-to-deliver is when a seller does not deliver shares to the buyer on the settlement date.(1)
Many brokerages offer stock lending programs as an optional service, typically requiring investors to meet certain eligibility requirements. Read on to learn about how stock lending works, its benefits and risks and which brokers offer this service.
What is stock lending?
Stock lending, also known as securities lending, is when an investor lends shares to another party for a fee plus interest.(2)(3) During this period, the lender temporarily loses shareholder voting rights and doesn’t receive dividends from lent-out dividend-paying stocks. Instead, they typically receive a cash substitute payment with different tax implications.
While stock lending provides additional income for investors, borrowers use the borrowed shares for short selling, covering trade settlements or as collateral for loans in margin accounts.
For investors holding stocks with no immediate plans to sell, stock lending can be a profitable way to generate extra income while maintaining their portfolios.
How does stock lending work?
To get started, you must have an account with a broker that offers stock lending. Then, there are a few steps to follow to complete the process:(4)
Matching. The broker identifies available shares and matches borrowers with lenders based on demand for specific stocks. This process is usually automated.
Agreement. The broker typically sets the terms of the agreement, including fees and required collateral.
Collateral. Based on the terms of the agreement, the borrower delivers the collateral, which is typically held in a custodial account with the broker. The collateral is usually cash or securities.
Transfer. Once the agreement is made and the collateral is delivered, the shares will be transferred from the lender to the borrower. The borrower is then free to use the shares for a short sale or other activities.
Payment. If your shares are lent, brokers typically pay a percentage of the total net proceeds they earn and receive for lending shares.
Return. When the loan term is over, the borrower returns the shares to the lender and the loan is complete.
Stock lending pros and cons
There are stock lending pros and cons for both borrowers and lenders.
Pros
Additional income. Lenders can earn passive income when they lend their shares out to borrowers.
Low effort with broker programs. Many retail brokers offer stock lending programs that handle the logistics.
Flexibility to opt out. Retain the right to recall your shares at any time or opt out of the broker’s stock lending program entirely.
Cons
Loss of voting rights and SIPC insurance. When loaning out stocks, lenders lose voting rights and Securities Investor Protection Corporation (SIPC) insurance coverage.
Dividend tax hit. You receive a payment in lieu, which is taxed as ordinary income (higher) rather than a qualified dividend (lower).
Counterparty risk exposure. If the broker or borrower defaults, you could face delays or losses recovering your shares.
In March 2023, SoFi launched its share lending program for all investors with shares in their account — regardless of the value or quantity of shares they hold. Members receive a minimum of 15% of the total net proceeds SoFi earns and receives, with payments made monthly. It operates under the Fully Paid Securities Lending Program and uses Apex Clearing as its clearing broker. Enrollment is automatic for SoFi Invest members, but members can unenroll at any time with a message to SoFi's chat or app messaging service.
Stock trade fee
$0
Minimum deposit
$0
Signup bonus
Get up to $1,000 in stock
Available asset types
Stocks, Options, Mutual funds, ETFs, Alternatives
Account types
Brokerage, IRA
Annual fee
$0 per month
Minimum deposit
$0
Signup bonus
Get up to $1,000 in stock
Cash sweep APY
0.01%
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees.
Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA(www.finra.org) /SIPC(www.sipc.org).
There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event.
Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options
Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser.
Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see https://www.sofi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information
Up to $1,000 in stock. Customer must fund their Active Invest account with at least $50 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
SoFi Plus members can schedule an unlimited number of appointments with a financial planner during periods in which the SoFi Plus member meets the eligibility criteria set forth in section 10(a) of the SoFi Plus Terms and Conditions. SoFi members who are not members of SoFi Plus can schedule one (1) appointment with a financial planner. The ability to schedule appointments is subject to financial planner availability. SoFi reserves the right to change or terminate this benefit at any time with or without notice. Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov.
Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.
unlimited 1% match on recurring deposits to a SoFi InvestⓇ account, paid in rewards points. Must be a SoFi Plus member at the time a recurring deposit is received into your SoFi Active or Automated investing account to qualify. Bonus calculated on net monthly recurring deposits made via ACH and paid out as Rewards Points. See Rewards Terms of Service. SoFi reserves the right to change or terminate this promotion at any time without notice. See terms and limitations. https://www.sofi.com/sofiplus/invest/#disclaimers
1% bonus when you transfer your portfolio to SoFi Active Invest. For full promotion terms please visit: SoFi.com/ACATterms. You must transfer at least $20,000 before April 17, 2025 and keep the investments in your SoFi Active Invest account through December 31, 2025 to be eligible for the incentive, which will be paid by January 31, 2026. SoFi does not accept cryptocurrencies and has some limitations on mutual funds and OTC stock.
Robo Advisor: Automated investing is offered through SoFi Wealth LLC, an SEC-registered investment adviser. 0.25% fee is based on your account value. The wrap program fee may cost more or less than purchasing brokerage, custodial, and record keeping services separately.
To participate in the Robinhood stock lending program, you must either have a minimum of $5,000 in total account value, at least $25,000 in reported income or some trading experience already. You will need to enable Stock Lending to get started, and then your shares will be eligible for loan. Fractional shares are not eligible, but you can lend whole shares of securities like stocks and exchange-traded funds (ETFs). If your stock is borrowed, you receive monthly payments of up to 15% of the gross revenue that Robinhood generates from lending shares. You can also disable Stock Lending to unenroll from the program at any time.
Like SoFi, Public participates in a Fully Paid Securities Lending Program with Apex Clearing Corporation as its clearing firm. You must enroll in the program to enable stock lending, but once you are, Apex may loan out the whole shares of stocks or ETFs in your brokerage account. In return, you receive a minimum of 10% of total net proceeds each month. To be eligible, you must have at least $5,000 in your brokerage account and have more than $50,000 in annual income, assets and net worth. You may not participate if you have a stated investing goal to preserve capital and no stated investing experience.
The Interactive Brokers stock lending program is its Stock Yield Enhancement Program for borrowing and loaning stock. Fully-paid shares earn 50% of a market-based rate, which you can view anytime, along with the interest rate you are being paid. Stock lending is available to Interactive Brokers clients who are approved for a margin account or hold a cash account with at least $50,000 in equity. Collateral must be paid in US Treasuries or cash.
The E*TRADE Fully Paid Lending Program is available to brokerage cash accounts and IRAs with at least $200,000 in assets under management or liquid net worth. After you enroll, your fully-paid securities are eligible for stock trading. Cash is used for collateral, and loan income is paid as a monthly credit with a market-driven interest rate that is based on several factors, including borrowing demand, market supply and short selling. To see the interest rate, as well as loaned shares and balance details, simply log in to your account, where you can also access a listing of your loaned shares and balance details.
Schwab's Securities Lending Fully Paid Program offers stock lending for your fully paid securities with cash as collateral and no trading restrictions. Enrollment is invitation-only and requires a call to the Securities Lending Services team to enroll or unenroll. Only accounts with a minimum $100,000 household net worth are eligible. Enrollment is then completed with a phone call to the Securities Lending Team. The interest rate is based on market demand, changing daily, and earnings are paid out monthly. You can log in to your account online to see your loaned shares, interest rate and total earnings.
Paid non-client promotion. Finder does not invest money with providers on this page. If a brand is a referral partner, we're paid when you click or tap through to, open an account with or provide your contact information to the provider. Partnerships are not a recommendation for you to invest with any one company. Learn more about how we make money.
Finder is not an advisor or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.
Is stock lending a good idea?
Stock lending can be profitable when you plan to hold your stocks for a long time. Many brokers offer stock lending programs, so you may be able to use the brokerage account you already have to receive earnings on the positions you hold.
However, you lose voting rights and SIPC insurance, and you have different tax implications if your dividend-paying stocks are lent out. Additionally, not all brokers guarantee minimum earnings, so your rate is often based on market demand.
Ultimately, whether stock lending is a good idea depends on your risk tolerance and overall investment strategy.
Bottom line
Stock lending allows investors to make money on the securities they already own, serving as a way to create passive income using your existing portfolio. However, it is important to know of the risks involved, as earnings are never guaranteed. Be sure to weigh the pros and cons before proceeding.
If you think it is right for you, compare the best brokers offering stock lending programs to get started.
Frequently asked questions
Is stock lending safe?
Just like an investment, stock lending has its risks, like loss of voting rights and SIPC insurance coverage, in addition to a different tax liability for dividend-paying stocks.(12) One should always exercise caution and consult a financial advisor for personalized advice regarding the best strategies for their portfolio.
Why would someone lend a stock?
Stock lending is a way for investors to earn passive income on the holdings in their portfolios.
Can you lose your stock on stock lending?
Once you loan your stock, you lose SIPC insurance coverage.(13) This leaves you vulnerable to potential losses if the broker goes under.
Lena Borrelli is an experienced finance writer with a deep understanding of personal finance, investing and consumer banking. Her work has been featured in top-tier publications such as Forbes, TIME, Bankrate, Moneywise and Annuity.org, where she provides expert insights on financial trends, smart money management and emerging fintech solutions. With a background in personal finance and content strategy, Lena specializes in breaking down complex financial topics into clear, actionable advice for readers. When she is not writing or scanning the news for the latest headlines, she is happiest spending time in the Florida sunshine with her husband and two pups. See full bio
Webull is a broker with zero-commission trading and a suite of tools to help you invest.
Advertiser disclosure
Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which Finder receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. Finder compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
How likely would you be to recommend Finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
