What is securities lending?

Fully paid securities lending lets eligible customers earn extra income by temporarily lending out stocks and ETFs they already own—without selling any investments. If there's demand, Betterment Securities lends your shares on your behalf and passes income back to you every month. You stay fully invested and can sell at any time.

How much could I earn?

We can't estimate it. It depends on demand for your particular shares, how long they stay on loan, and the income share rate. Hard-to-borrow securities earn more. Widely held ones earn little, and in some months may not be borrowed at all. Betterment Securities keeps a portion of the net lending income and passes the rest to you. The minimum rate you’ll earn is in the program disclosure here. Income is variable and not guaranteed.

How do I earn income from securities lending?

Betterment Securities keeps a portion of the net lending income and passes the rest to you. You can look up the current rate in the program disclosures, the rate can move with market demand and other factors, but never below what's disclosed there. There's no fee to participate, and nothing is deducted from your account. Your income arrives monthly, and our tax-aware approach helps offset added tax impact, at filing time.

Which of my accounts are eligible?

Fully paid whole shares of U.S.-listed stocks and ETFs, held in taxable accounts—individual and joint—and in tax-advantaged accounts. Fractional shares and margin-held positions aren't eligible, and neither are trusts or business accounts. You'll also need a completed financial profile. Lending includes your full Betterment account. Eligible securities across all your accounts can be lent, excluding trusts, 401(k)s, and accounts with a drawn SBLOC. You can't include some and exclude others. Joint accounts follow the primary holder's choice. You can opt out from your account settings at any time. Participation is subject to Betterment Securities' discretion.

Can I sell my investments while they're on loan?

Yes. You keep full ownership and can sell or opt out of securities lending at any time. Selling automatically ends the loan and the shares return to your account. You don't need to wait for anything or ask us first.

What happens when I opt out?

Change your preference in your account settings and you're out. Any shares still on loan are recalled and returned to your account, and no new loans are made. You'll still be paid with the next monthly payment for the days your shares were on loan before you left. Nothing is clawed back, and there's no fee or penalty for leaving. You can opt back in later if you change your mind.

What happens to my dividends while my investments are on loan?

In most cases, you'll receive a cash-in-lieu payment instead of the dividend itself. If that happens, these payments are reported as ordinary income in Box 8 of your 1099-MISC, which may be taxed at a higher rate than a qualified dividend depending on your bracket and account type.

How does Betterment account for the potential tax impact of receiving dividends while shares are lent?

Betterment’s tax-aware approach is designed to keep eligible shares working while accounting for the potential estimated federal tax impact of cash substitute payments. Betterment relies on the information in your financial profile in its analysis, so keeping that information current helps us assess the potential impact more accurately. Betterment is not a tax advisor and cannot guarantee your individual tax outcome.

What are the risks of securities lending?

Lending isn't risk-free, and income isn't guaranteed. Here are some things to consider: Variable income. Lending depends on market demand and changes month to month. There's no guarantee your shares will be loaned or that you'll earn anything in a given month. Tax treatment. While your shares are on loan, dividends are generally replaced by cash substitute payments, taxed as ordinary income instead of the lower dividend rate, and reported in Box 8 of your 1099-MISC. Counterparty risk. If a borrower defaults, Apex must return your shares using the pledged collateral. In that rare event, you have rights to that collateral. No SIPC coverage on loaned shares. Shares on loan aren't SIPC-protected. The cash collateral is what secures them instead. Voting rights transfer. The borrower holds the proxy vote for the length of the loan. How cash collateral protects you. Every loan is secured by cash worth at least 100% of the market value of your loaned shares. It's marked to market daily—recalculated each market day against current prices—so if your shares rise in value the borrower has to post more, and if they fall the excess is returned. That cash sits in a custody account at JP Morgan Chase Bank, NA, administered by Wilmington Trust, National Association, as trustee. It isn't held by the borrower, and it isn't held by us. Full details are in Betterment Securities' disclosures and Apex's terms.

Who borrows my shares, and why?

Banks, hedge funds, market makers, and other institutions. They borrow to support trading strategies like hedging, market-making, and short selling—betting a price will fall—and to meet settlement obligations or add liquidity. In every case they pay a fee for the temporary use of the shares. Your own position doesn't change either way: you keep the economic value of your shares whether they're on loan or not. But if lending to short sellers doesn't sit right with you, that's a good enough reason to skip the program. Apex, Betterment Securities' clearing partner, is the principal borrower of your shares and may lend them on to other institutional counterparties.

Skip to main content Skip to footer

Individuals
Employers
Advisors

Invest
Start investing with Betterment today and earn up to $2,000! Terms apply.
Claim offer
Cash
- High-yield cash
  
  No fees or minimums. FDIC insured up to $8M (joint). Unlimited withdrawals. Variable APY.
- Checking
  
  Everyday spending with no foreign transaction or ATM withdrawal fees.
New customer offer: 4.25% APY

Unlock our highest variable rate of the year!
Claim offer
Retirement
- Solo 401(k)s
  
  Save with a high contribution limit for self-employed individuals.
- 401(k) plans for your business
  
  Scalable retirement solutions for your employees.
Start investing with Betterment today and earn up to $2,000! Terms apply.
Claim offer
Premium
Offers
Double dip on rewards when you refer a friend!
Learn more
Resources
Free financial advice, for the busiest season of your life

Unlock live chats with a licensed financial specialist, then get help moving beyond the basics of investing.
Learn how

See solutions for

Individuals
Employers
Advisors

Log in

Earn extra income with securities lending

Lending your stocks and ETFs to other investors can earn you income without selling a thing.

Get started

Securities on loan are not SIPC-protected, the owner loses proxy voting rights, and payments in lieu of dividends may receive less favorable tax treatment. Earnings are variable and not guaranteed.

Lending is how banks make money. Here’s how you can too:

Opt in.
You decide to lend your eligible shares. They're backed by at least 100% cash collateral, and you can opt out any time.
We lend out your shares.
When sellers want your shares, we automatically lend them out.
Trade without restrictions.
Sell any share whenever you want. A loan never gets in the way.
Get paid monthly.
Payments are passed along every month and you stay fully invested.

Earn income with taxes in mind.

If a stock is on loan when it pays a dividend, you may receive a cash-in-lieu payment instead—and that payment can be taxed differently. Betterment uses your financial profile to estimate the potential federal tax impact and provides an annual credit, which helps limit tax consequences.

Lent shares are still yours and protected.

Cash collateral of at least 100%

Every loan is backed by cash worth at least the full market value of your shares.
You keep ownership

Sell or recall at any time. Selling ends the loan and the shares return to your account.
No cost or lock in

There's no fee to participate, and you can opt out at any time.
Lending across your full account

We lend from all your investing accounts; you can't include some and exclude others.

(Trust and 401(k)s are exempt.)

Betterment primarily earns revenue through management fees (AUM-based or flat monthly fees), compensation from program banks on cash, securities lending activities, and payment for order flow. Learn more.

Earn extra income on what you already own.

Questions about securities lending? We have answers.

Lending isn't risk-free, and income isn't guaranteed. Here are some things to consider:
- Variable income. Lending depends on market demand and changes month to month. There's no guarantee your shares will be loaned or that you'll earn anything in a given month.
- Tax treatment. While your shares are on loan, dividends are generally replaced by cash substitute payments, taxed as ordinary income instead of the lower dividend rate, and reported in Box 8 of your 1099-MISC.
- Counterparty risk. If a borrower defaults, Apex must return your shares using the pledged collateral. In that rare event, you have rights to that collateral.
- No SIPC coverage on loaned shares. Shares on loan aren't SIPC-protected. The cash collateral is what secures them instead.
- Voting rights transfer. The borrower holds the proxy vote for the length of the loan.
- How cash collateral protects you. Every loan is secured by cash worth at least 100% of the market value of your loaned shares. It's marked to market daily—recalculated each market day against current prices—so if your shares rise in value the borrower has to post more, and if they fall the excess is returned.
That cash sits in a custody account at JP Morgan Chase Bank, NA, administered by Wilmington Trust, National Association, as trustee. It isn't held by the borrower, and it isn't held by us. Full details are in Betterment Securities' disclosures and Apex's terms.

Skip to audience navigation

Accounts
Tools
Service
Resources
About
Rewards
- 4.25% APY boost
- Refer a friend
Disclosures
- Legal

Fully-paid securities lending is offered by Betterment Securities. Learn more.

IMPORTANT BETTERMENT DISCLOSURES

Information is educational only and not investment or tax advice. External links are educational, and do not imply Betterment’s endorsement. All screenshots are for illustrative purposes only.

Who Provides What Service?

Investment Advice: Advisory services are provided by Betterment LLC, an SEC-registered investment adviser. Betterment LLC's internet-based advisory services are designed to assist clients in achieving discrete financial goals. They are not intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client's financial situation and do not incorporate specific investments that clients hold elsewhere. Betterment is not a tax advisor.

Brokerage Services & Custody: Brokerage services are provided to clients of Betterment LLC by Betterment Securities, an SEC-registered broker-dealer and member of FINRA/SIPC, and Apex Clearing Corporation, a third-party SEC registered broker-dealer and member FINRA/SIPC.

Betterment Checking: Betterment Checking is made available through Betterment Financial LLC. Checking accounts and the Betterment Visa Debit Card provided by and issued by nbkc bank, Member FDIC. See Betterment Checking Disclosure.

Betterment at Work: 401(k) plan administration services provided by Betterment for Business LLC. Investment advice to plans and plan participants provided by Betterment LLC, an SEC registered investment adviser.

No Betterment entity is a bank.

Special Disclosure For Betterment Cash Reserve

Betterment Cash Reserve is part of the Cash Sweep Program (“CSP”) and is offered by Betterment LLC. CSP requires a Betterment Securities brokerage account. Client funds in the CSP are deposited into one or more FDIC-insured banks (“Program Banks”). Assets in the Cash Reserve Program under the CSP earn variable interest. CSP assets are eligible for FDIC insurance (subject to certain conditions). Funds in brokerage accounts are protected by SIPC, but funds at Program Banks are FDIC-insured up to $250K per depositor per bank, with a potential aggregate limit of $4M ($8M for joint accounts) once the funds reach one or more Program Banks. Funds in transit to or from Program Banks are generally not FDIC-insured but are covered by SIPC. FDIC insurance limits include all accounts held at a bank, not just CSP funds. For details, see Betterment’s CSP disclosure and Form ADV Part 2. FDIC insurance information is available at FDIC.gov.

Let’s Talk About Risk:

Investing involves risk and there is the potential of losing money when you invest in securities. Past performance does not guarantee future results and the likelihood of investment outcomes are hypothetical in nature.Investments in securities are: Not FDIC Insured • Not Bank Guaranteed • May Lose Value. Before investing, consider your investment objectives and Betterment LLC's fees and expenses. For more details, see Betterment’s Form CRS, Form ADV Part II and other disclosures. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdictions where Betterment LLC is not registered.

Who Provides the Market Data? Market Data by Xignite and FactSet. Copyright © 2025 FactSet Research Systems Inc. Fund data © 2022 Morningstar. All Rights Reserved.

© Betterment Holdings Inc. All rights reserved. Betterment, 450 West 33rd Street, FL 11 New York, NY 10001

You are viewing a web property located at Betterment.com. Different properties may be provided by a different entity with different marketing standards.

Site Map
Terms of Use
Privacy Policy
Trademark
Legal Directory

Google Play and the Google Play logo are trademarks of Google, Inc.

Apple, the Apple logo, and iPhone are trademarks of Apple, Inc., registered in the U.S.

Betterment assumes no responsibility or liability whatsoever for the content, accuracy, reliability or opinions expressed in a third-party website, to which a published article links (a “linked website”). Such linked websites are not monitored, investigated, or checked for accuracy or completeness by Betterment. It is your responsibility to evaluate the accuracy, reliability, timeliness and completeness of any information available on a linked website. All products, services, and content obtained from a linked website are provided “as is” without warranty of any kind, express or implied, including, but not limited to, implied warranties of merchantability, fitness for a particular purpose, title, non-infringement, security, or accuracy. If Betterment has a relationship or affiliation with the author or content, it will note this in additional disclosure.

Earn extra income with securities lending

Lending is how banks make money. Here’s how you can too:

Opt in.

We lend out your shares.

Trade without restrictions.

Get paid monthly.

Earn income with taxes in mind.

Lent shares are still yours and protected.

Cash collateral of at least 100%

You keep ownership

No cost or lock in

Lending across your full account

Earn extra income on what you already own.

Earn extra income on what you already own.

Questions about securities lending? We have answers.