What is 'Margin Loan Availability'

Margin loan availability describes the amount in a margin account that is currently available for purchasing securities on margin or the amount that is available for withdrawal. A margin account makes loans available to the customer of a brokerage firm using the customer's securities in their account as collateral. As the value of the securities in the account rises and falls, the amount that becomes available for loan also changes, since the securities have to cover the amount made available for the loan. If the securities drop in value, so does the margin loan availability. Margin loan availability can be used in a couple of specific contexts.

1. The dollar amount in an existing margin account that is currently available for purchasing securities. For new accounts, this represents the percentage value of the current balance that is available for future margin purchases.

2. The dollar amount available for withdrawal from an account with existing marginable positions being used as collateral.

BREAKING DOWN 'Margin Loan Availability'

Margin loan availability tells a brokerage customer how much money in the account is currently available for purchasing securities on margin or how much is available for withdrawal. The margin loan availability will change daily as the value of margin debt (which includes purchased securities) changes, but it may not reflect pending trades that are in between the trade date and the settlement date. If the margin loan availability amount in an investor's account becomes negative, the investor may be due for a margin call or formal request to sell some of the marginable securities.

Example of Margin Loan Availability

For example, Bert is a client at Ernie's Brokerage Firm. Bert has a margin account with some securities in it. These securities are held as collateral by Ernie's Brokerage Firm for any money Bert borrows to buy securities or withdraw from the account. The money borrowed from Ernie's firm to buy these additional securities or to withdraw is called a margin loan. The available amount Bert can take at a given time is called the margin loan availability and is based on the current value of the pledged securities.

  1. Buying Power

    Buying power is the money an investor has available to buy securities ...
  2. Initial Margin

    Initial margin is the percentage of the purchase price of securities ...
  3. Buying On Margin

    Buying on margin is the purchase of an asset by paying the margin ...
  4. Long Market Value

    The long market value is the current market value of the securities ...
  5. Maintenance Margin

    Maintenance margin is the minimum amount of equity that must ...
  6. Call Loan

    A call loan is a loan that the lender can demand to be repaid ...
Related Articles
  1. Trading

    Margin Trading

    Find out what margin is, how margin calls work, the advantages of leverage and why using margin can be risky.
  2. Insights

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.
  3. Personal Finance

    Personal Loans vs. Car Loans

    How to tell whether a personal loan or a car loan is better for you.
  4. Investing

    Spreading The Word About Portfolio Margin

    An underused opportunity provided in an SEC rule can enhance returns and lower risk for spread traders.
  5. Investing

    A Look At Corporate Profit Margins

    Take a deeper look at a company's profitability with the help of profit margin ratios.
  1. How much can I borrow with a margin account?

    Understand the basics of margin accounts and buying on margin, including what amount investors can typically borrow for purchases ... Read Answer >>
  2. What are the different types of margin calls?

    Learn the differences between margin calls and fed margin calls while reviewing the definitions of each and how to satisfy ... Read Answer >>
  3. What's the difference between a cash account and a margin account?

    All transactions in a cash account must be made with available cash or long positions; a margin account allows investors ... Read Answer >>
Trading Center