How a Home Equity Line of Credit Can Finance Your Start-Up Business

Tip! Some lenders of home equity loans offer low introductory rates that might look like a great deal but these deals usually revert automatically to higher home equity loan interest rates.

Finding the cash you need to get your business off the ground can be a frustrating experience frustrating. Most lenders require a solid business history and business assets to approve a loan. Because of this, many new business owners often use personal savings or credit cards to fund start-up costs. But, paying credit card interest rates that can amount to 20% or more and draining your personal savings can be a real killer.

So, what do you do if you don't want to pay high interest rates rates, and you don't qualify for a traditional commercial loan? "You might be a lot better off using a home-equity mortgage to get your funding," says Jay Trien, a certified public accountant in Morristown, N.J. The good news is that there is a way entrepreneurs can tap into their home's equity while building a credit history in their company's name--a business home equity line of credit (HELOC).

The business HELOC works the same way as a traditional HELOC except that you must use the money for your business, and the payment history on this type of loan is transferred to your business's credit rating. As a result, a positive payment history on the business HELOC will result in your building sufficient credit to obtain traditional commercial financing, without including personal collateral, to fund future growth A business HELOC is set up exactly as any other equity line of credit. Business owners can easily access cash out on the line of credit, either by writing a check or electronically transferring funds up to the limit of the loan, which can really help with on-going start-up expenses, act as emergency funds and help preserve your cash flow. Business HELOCs, like other home equity loans (second mortgages), are secured by the equity in your home. The interest rate can be fixed or left as a variable rate, and some HELOCs can be interest only loans. And, the interest in a business HELOC can be tax deductible as a business expense.

The low rates and the flexibility of the fact that you only pay interest on funds you access, make a business HELOC a viable option for securing start-up capital. It is also easier to qualify for a business HELOC than for traditional commercial loans. And, unlike commercial loans, HELOCs do not include application, Small Business Administration (SBA) guarantee fees or other third-party costs, so more of your money will be available for your business. Also, if the term expires while an amount is outstanding, you may be able to extend the line rather than having to apply for a new loan.

Maria Ny is an acclaimed free-lance writer from San Diego. She has published many articles that covered a broad range of subjects ranging from Debt Consolidation, Bankruptcy Reform, Credit Repair to Subordinate Financing. Check out her helpful articles online at BD Second Mortgage Loans. You can learn more about financing credit card debt and get additional loan parameters for debt consolidation loans. Get a free loan quote for a home equity line of credit. We suggest you get more information and learn more about the guidelines for fixed rate second mortgages that could help lower your monthly payments by reducing the high interest rates of your credit card debt.

Home Equity News:

Bing: home equity site:msnbc.msn.com
Search results

Home equity loans drying up for some - Business - Personal finance ...
Like many homeowners during the housing boom, Lynnette Madden and her husband decided to open a home equity line of credit about a year and a half ago as ...
Americans' home equity near a record low - Business - Real estate ...
WASHINGTON ? Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point ...
Home equity lines have dried up across U.S. - Business - Personal ...
Home equity lines have dried up across U.S. As home prices collapse, banks cut off credit, further souring the economy Below:
Late payments for home equity loans rise - Business - Real estate ...
WASHINGTON ? Late payments on home equity loans climbed to a 1½-year high in the opening quarter of this year, while delinquencies on credit card bills ...
Retirees no longer count on home equity - Business - Personal ...
Many Americans have recently found themselves changing retirement plans after losing a substantial amount of home equity as the housing market and the ...
Equity in Americans? homes falls to historic low - Business ...
NEW YORK ? The equity Americans have in their most important asset ? their homes ? has dropped to its lowest level since the end of World War II ...
Students get creative to pay off loans - Business - Personal ...
Lines of credit typically work like a credit card, with a limit and a revolving balance: the average home-equity line of credit currently has an interest rate ...
Use of home equity hits a four-year low - Business - Real estate ...
Use of home equity hits a four-year low Freddie Mac report cites falling residence values, stricter lending standards Below:
Ford, Toyota are pinning their hopes on China - Business - Autos ...
NEW YORK ? Ford Motor Co. plans to build a new assembly plant in China ... $30K home equity loan FICO: 5.75%
Cities sue, invest to stop foreclosures - Business - Real estate ...
These stem from lost tax revenue and jobs as well as slower consumer spending that come with home equity declines, and don?t even include the financial toll ...

Newsfeed display by CaRP