Commercial Loans: Home Equity Loan Alternative
COMMERCIAL LOANS have always been difficult to obtain and aren't at the lowest interest rates available for other types of loans such as home equity loans.
This article discusses the advantages of using a home equity loan to finance a portion of your startup costs or potentially all of them if your needs are small at first.
There are several advantages with a home equity loan over a commercial loan. First of all, they are easier to obtain than venture capital money and traditional commercial loans and you can deduct interest payments from your taxes every year.
The most common concern voiced by those interested in a commercial loan and considering home equity is that you are putting your home up as collateral. Taking this risk into account, we recommend only financing a portion of your commercial loan using home equity.
Home equity loans are available at great rates that you might not be able to get with a commercial loan. Recently, home equity loans have been obtained at rates below 4%.
If you have owned your home for more than a few years, simply apply, there is no obligation and our lending professionals can help point you in the right direction to get a loan that suites your commercial loan needs.
Common Questions:
1 Why use a home equity loan in place of a commercial loan?
You can deduct the interest payments made on a home equity loan. Another advantage over commercial loans is that they are easier to obtain and often have lower rates of interest.
2 Where can I find help getting a commercial loan?
Check out what the small business administration can offer in the way of commercial loans. If you meet their requirements they can help you get lower interest longer loan terms that are easier to repay for startups.
3 Are there home equity loan limits?
We recommend taking out only a portion of your total equity as a loan. It is possible to borrow up to all of your equity to finance your business but we recommend this only if the borrower is well aware of the risks of using their home as collateral for a loan.