Borrowing against restricted or unvested stock.

Restricted or unvested stock qualifies for a Lombard loan arranged by Lombard Financing only once it becomes freely tradable. The firm’s criteria require freely tradable shares listed on a recognised exchange, so unvested awards, shares under a lock-up and private pre-IPO holdings do not qualify. A facility can still be planned in advance, ready for the day the restriction lifts.

The short answer

A Lombard loan arranged by Lombard Financing is secured by a pledge of freely tradable shares listed on a recognised exchange. Restricted, unvested and private pre-IPO holdings fail one or more of those tests, so they do not qualify while the restriction is in place.

The restriction is often a matter of timing rather than a permanent bar. A founder or executive with wealth in restricted or locked-up stock can plan a facility for the day the shares become freely tradable, and in the meantime may be able to borrow against other listed shares that already trade freely.

Why restricted and unvested stock is hard to pledge

The heart of a Lombard loan is that the lender can value the collateral day by day and, in the last resort, sell it to clear the debt. Restricted and unvested stock breaks both halves of that. Unvested awards are not yet shares at all: an unvested restricted stock unit (RSU) or option is a contractual right to receive shares in the future, subject to service or performance conditions. There is nothing to pledge and nothing to sell, so there is no collateral in the sense a lender means.

Vested-but-restricted shares do exist — post-IPO lock-up shares, founder holdings subject to contractual restrictions, or restricted securities that carry a holding period and resale limits — but they cannot be freely transferred. A lender that cannot rely on being able to realise the collateral on demand cannot treat it as ordinary security.

Private pre-IPO shares add a further problem again: there is no public market and no observable price, and a transfer often needs the company’s or other shareholders’ consent. Each of these features keeps the holding outside the firm’s criteria until the shares are listed and freely tradable.

What lenders accept

Good Lombard collateral is freely transferable, listed on a recognised exchange, liquid, and readily valued; the firm’s own criteria are set out in who qualifies for a Lombard loan. Against that benchmark, the holdings that fail are clear: unvested RSUs and options, because they are not yet shares; lock-up shares during the lock-up window; restricted securities that require a holding period or limit resale; and private-company shares with transfer restrictions.

Where a clear, near-dated path to free trading exists, such as a lock-up close to expiry or restricted shares with a defined route to registration or clearance, the useful step is preparation rather than an early loan. The restriction terms can be reviewed and a facility prepared in advance, ready to draw once the shares are freely tradable. A pre-IPO holding must first be listed and then come free of any lock-up.

Concentration matters too. Even once the shares are free to trade, a single founder or executive stake is assessed as a concentrated position, not a diversified book. A large single holding in one name supports a more cautious loan-to-value than a broad, liquid portfolio, because the lender must be able to value and, if necessary, realise it without moving the market against itself.

Options for founders before liquidity

Founders and early employees have two broad routes to liquidity before a restriction lifts: plan a facility for the day the shares become freely tradable, or borrow in the meantime against other listed shares that already trade freely. They are often asset-rich and cash-poor in the run-up to an exit: the paper value is real, but it is not yet spendable.

The first route is to plan ahead. The lock-up or vesting terms are reviewed and a facility is prepared before the shares become freely tradable, so that it can be drawn on the day they do; planning for lock-up expiry sets out how this works after a listing.

The second route is to borrow against other listed shares that already trade freely, such as a diversified share portfolio or holdings from a prior liquidity event, while the restricted stake stays untouched. Why holders borrow rather than sell is explained in how the wealthy borrow against stock.

It is worth being plain about what is not available. Lombard Financing does not arrange facilities against shares that are not yet freely tradable, whether through a pre-IPO structure or otherwise: unvested awards, locked-up shares and unlisted pre-IPO holdings qualify only once they have become listed shares that trade freely.

Once shares vest

When shares vest, settle into the holder’s name, and are free of transfer restrictions — after a lock-up expires, a holding period runs its course, or restricted stock is registered or cleared — they become ordinary listed collateral. At that point a Lombard loan is straightforward. In the United States the same facility is often called securities-based lending.

Vested, unrestricted shares are assessed on liquidity, market, volatility, concentration and recourse, exactly like any other listed holding, and the loan-to-value follows from that assessment. For many holders the whole question is one of timing: the same stock that could not be pledged one quarter is ordinary collateral the next, once the restriction has lifted. Planning the facility ahead of the vesting or expiry date means the liquidity is ready when the shares are.

Risks and regulatory notes

Beyond transferability, restricted and insider stock sits inside a web of contractual and regulatory rules: blackout periods, pre-clearance, issuer pledging policies, resale limits, and disclosure. Insiders and affiliates may be subject to blackout periods, pre-clearance requirements, and obligations to disclose a pledge of their shares. Some issuers’ own policies, and some governance codes, restrict or prohibit directors and officers from pledging company stock at all. Securities law may limit the resale of restricted securities for a defined period. And any pledge of a substantial or insider stake can itself trigger disclosure obligations to the market or the regulator.

None of this is legal advice. The point is that pledging insider stock, or planning a facility for restricted stock about to become freely tradable, is as much a legal and compliance question as a credit one, and both sides must be cleared before a facility is arranged.

Where the shares are freely tradable, a facility can turn the position into working capital without a sale, the principle behind every Lombard loan; where they are about to become so, the facility can be prepared now and drawn on that day. Where they are not, the honest answer is to wait, or to borrow against other listed shares that already trade freely. A senior principal can tell you quickly which of those applies to a specific holding.