HELOC for Business: Tap Your Home Equity, Fund Your Company
A Home Equity Line of Credit (HELOC) lets you borrow against the equity in your home and use the proceeds for any purpose — including funding your business. HELOCs offer some of the lowest interest rates in the entire small-business funding market, with the flexibility of revolving access.
How a HELOC works for business funding
A HELOC is secured by your home. The lender approves a credit line up to a percentage of your home's value, minus your existing mortgage. You draw funds as needed, pay interest only on what you use, and replenish the line as you repay it.
Because the loan is secured by real estate, rates are typically only 1–3 points above prime — dramatically lower than unsecured business products.
Typical requirements
- 20%+ equity in your primary residence
- Combined LTV (mortgage + HELOC) usually capped at 80% – 85%
- Personal credit score 680+ for best rates
- Stable personal income and debt-to-income under 43%
- Home appraisal and title work required
Typical structure
HELOCs are issued by banks and credit unions. Actual rates and structure are set by the lender at the time of formal application:
- Variable rate priced as Prime + a margin (margin varies by lender, credit profile, and combined LTV)
- Some lenders offer fixed-rate HELOCs at a slight premium
- Common structure: 10-year draw period with interest-only payments
- Followed by a 20-year repayment phase amortizing principal + interest
- Final pricing and terms are determined by the lender and not guaranteed
Pros & cons
- Among the lowest rates in business funding
- Flexible — only pay interest on amounts drawn
- Reusable line, similar to a credit card
- Interest may be tax-deductible (consult your CPA)
- Larger limits than most unsecured business lines
- Your home is collateral — default risks foreclosure
- Variable rates expose you to rate hikes
- Closing costs and appraisal fees apply
- Slower to close than alternative business products
- Mixes personal and business risk
Who is a business HELOC best for?
- Owners with substantial home equity and strong personal credit
- Businesses that need flexible access to lower-cost capital
- Bridge funding while waiting on slower products like SBA
- Owners comfortable with the personal risk of secured borrowing
- Skip a HELOC if your business is high-risk or you can't afford to put your home on the line.
Important: Business Funding Page is a neutral advisory platform. We do not lend money. Actual rates, terms, and offers are provided by third-party lenders and depend on your specific business profile. We do not guarantee approval or specific terms.
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