Fund your business with your home equity
A home equity line of credit (HELOC) lets you borrow against the value of your home, draw what you need when you need it, and pay interest only on what you use. It can cost less than unsecured business credit, but your home secures the line.
Lenders set credit lines, rates and terms based on your equity, credit, income and state.
How it works
How a HELOC works
A HELOC works like a credit card backed by your house. You get a credit limit, borrow from it as needed, and the balance you repay frees up credit again.
Draw period
Borrow what you need
Pull funds by transfer or check, as often as you need, up to your limit. Many lenders let you pay interest only during this time.
Often 10 years
Repayment period
Pay it down
Drawing stops and you repay principal plus interest. Payments usually rise compared with the draw period.
Often 10 to 20 years
Rate
Usually variable
Most HELOC rates follow the prime rate, so your payment can go up or down. Some lenders let you lock part of the balance at a fixed rate.
Prime + a margin
Ready to see your matches?
Answer a few questions to see home equity options you may qualify for. Free to check, no obligation.
For business owners
What owners use a HELOC for
Because the line stays open, a HELOC suits costs that come in waves rather than one lump sum.
Inventory and seasonal swings
Stock up before your busy season and pay it back as sales come in.
Equipment and vehicles
Buy the truck, oven or machine that lets you take on more work.
Opening or expanding
Fund a build-out or a second location in stages, drawing as invoices arrive.
Replacing costly debt
Pay off higher-cost cash advances or cards, then repay at a lower rate.
Is it right for you?
When a HELOC makes sense
A HELOC may fit if you
- Have at least 15–20% equity in your home
- Need money over time, not all at once
- Have steady income and good credit
- Want a lower rate than unsecured credit
- Can wait a few weeks for an appraisal and closing
Look at other options if you
- Need funds in a day or two
- Rent, or have little equity
- Aren’t comfortable putting your home on the line
- Have uneven income and a tight budget
- Want a fixed payment from day one
Your home secures the line
If you can’t make your payments, you could lose your home. Rates are usually variable, so payments can rise. Mixing business and household finances also means a business setback can reach your family’s home, so plan for a slow month before you draw.
Compare
HELOC or business loan?
| HELOC | Business loan | |
|---|---|---|
| Secured by | Your home | Business revenue or assets, sometimes a personal guarantee |
| Based on | Home equity, personal credit and income | Business revenue and time in business |
| How you get it | Credit line you draw from over time | Lump sum, or a business line of credit |
| Rate | Usually variable, often lower | Fixed or factor rate, often higher |
| Time to funds | Often 2 to 6 weeks | As fast as 24 to 72 hours |
| Best for | Homeowners with equity and time to plan | Established businesses with $20K+ monthly revenue |
Need funds faster, or rather keep your home out of it? Compare business loans →
Getting started
Check your options in four steps
1
Estimate your equity
Start with your home’s value and what you still owe.
2
Share a few details
Credit range, income and your property’s location.
3
Compare offers
Look at the credit line, rate, margin, fees and draw period.
4
Appraisal and closing
The lender values your home and you sign. Expect a few weeks.
What lenders look at
What affects your credit line and rate
- Home equity
Most lenders cap total debt on the home at 80–90% of its value. - Credit score
Many want 620 or higher. Better scores get lower margins. - Debt-to-income
Often 43% or less, counting the new HELOC payment. - Proof of income
Self-employed owners usually show two years of tax returns.
Learn more
Home equity guides
HELOC questions, answered
Can I use a HELOC for my business?
Usually, yes. Most lenders don’t restrict how you spend HELOC funds. Keep business spending separate in your records so it’s easy to track.
How much can I borrow?
Lenders typically let your mortgage plus the HELOC total 80% to 90% of your home’s value. Your credit, income and debts can lower that amount.
Will checking my options affect my credit score?
Checking options usually starts with a soft inquiry, which doesn’t affect your score. A lender runs a hard inquiry when you formally apply.
How long does it take to get the money?
Often 2 to 6 weeks, because the lender needs to appraise your home and close the line. If you need funds sooner, a business loan or cash advance may be faster.
What happens if I can’t make my payments?
Your home secures the line, so missed payments can lead to foreclosure. Talk to your lender early if money gets tight; many have hardship options.
Is the interest tax deductible?
It depends on how you use the money. Rules differ for home improvements and business use, so ask a tax professional before you count on a deduction.
Is Best Business Outcomes a lender?
No. We connect you with lending partners. Each lender makes its own credit decision and sets its own rates and terms.
Best Business Outcomes is not a lender and does not make credit decisions. A HELOC is secured by your home; if you fail to repay, you could lose your home. HELOC rates are usually variable and can increase. Credit lines, rates, fees, terms and closing costs are set by each lender, depend on your equity, credit, income and state, and are not guaranteed. Consult a tax advisor about the deductibility of interest.
See what your equity could unlock.
Free to check. No obligation.