Small Business Loans for Women

Financing a Small Woman Owned Business with Home Equity Loans

Financing a Small Business with Home Equity

Women Business owners who are also home owners can find a great advantage to owning a home by obtaining a home equity loan for business purposes.

Pros of Financing a Small Woman Owned Business with a Home Equity Loan

- Funding is easily available for start-up businesses and new busineses.

Small business loans, especially for new businesses or start-up businesses, aren't always easy to come by, so home equity loans for business are an excellent resource for striving business owners. Lenders do not normally require that you provide a business plan or detailed business loan proposal since you're using your home for collateral, so home equity loans for business purposes can often be approved much more quickly than business loans or other types of loans..

- Loans with large values are often available.

Because property values continue to rise, home equity can be built up quickly. Home equity loans for business, therefore, can offer high values and more funding when the funding is needed the most. Loans with larger values offer business owners the opportunity to purchase property and inventory, as well as keep cash on hand for irregular cash flow periods. Home equity loans for business, therefore, offer an opportunity for small, new, or start-up businesses to move forward more quickly in reaching their business goals and objectives with this added funding. Extreme caution and care should be taken with home equity loans for business, though, because overspending or not being able to keep up with payments can have adverse effects on credit scores, and can put personal finances and home ownership at risk.

- Interest rates are low.

Especially if your credit is good, and even if it's not so good, interest rates for home equity loans for business are usually lower than for conventional business loans. To ensure that you get the lowest rate possible, contact several lenders, including the bank that you regularly work with, as well as other banks, credit unions, and mortgage companies. Check your local newspapers for special offers, and search the world wide web for details as well.

- Interest may be tax deductible.

In many instances, the home equity loan for business can be tax deductible, just like your mortgage. Consult your accountant or an attorney for details.

- Individuals with poor credit can usually obtain a home equity loan for business fairly easily.

Even if your credit is less than desirable, a home equity loan for business is usually obtainable. Interest rates may be higher if you need to search for a lender specializing in poor credit home equity loans or other poor credit loans, but they can also help build credit scores, leading you to a better financial standing, and opening doors that will lead to reducing interest rates on future loans you might require.

Cons of Financing a Small Business with a Home Equity Loan
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- Home ownership can be at risk.

As with any loan, including personal loans, business loans, credit cards, and lines of credit, there is risk involved if you're unable to make your loan payments on time. However, home equity loans for business are unique because if you default on the loan, you may lose both your home and your business. Don't take out a home equity loan for business in haste. Examine your personal and business situations very carefully, and be sure to budget your money properly so that loan payments can be made consistently and on time. Not making the payments as scheduled will reduce credit scores significantly.

- Loan terms and conditions can greatly vary.

As with other loans, terms on home equity loans for business can vary greatly. Shop around with various lenders, including your bank or credit union, other banks or credit unions, and mortgage companies, to be assured that you're getting the best rate and term suited for your specific needs. Before signing, review the contract carefully, and don't be afraid to ask questions or consult an attorney before signing on a home equity loan for business. Stay away from home equity loans for business that require balloon payments, or if you accept a loan with a balloon payment, have a plan on how you will make that final payment in full. In some cases, you may have to borrow more money to make the balloon payment, and that may or may not be the best option in your particular case.

Rebecca Game is the founder of Digital Women ®, an online community for women in business. A 30 year entrepreneur and dedicated to helping other women find business loans.

Small Business Loan Resources:

• Small Business Loans for Women