Home Equity

Business finance is a constant requirement for any business and without adequate cash flow a business can run into trouble. In such a scenario taking advantage of your home equity with a home equity loan can be a good idea. Leveraging the equity of your home to generate cash flow in difficult times often proves to be the best option since home equity loans have competitive interest rates and flexible terms and conditions. Since a home equity loan falls under the category of secured funding, lenders look to the equity when approving the loan provided the property has clear title.  Home equity loans are normally taken for funding operational expenses or capital expenditure. The tenure of a home equity loan is generally for a short to medium term duration. However extending or “rolling over” the loan is common especially when the loan is taken for capital expenditure and the return on investment is a gradual process.

Home Equity

 

A home equity loan is a win-win deal for the borrower and the loan provider. The borrower does not have to jump over as many hurdles or provide financials but will put-up real estate security for a home equity loan. The lender takes the risk and lends to the business and in the event of a default will look to realising the asset. The borrower can also negotiate flexible terms and conditions when applying for a home equity loan if they wish to repay early. There are several credible private funders that offer home equity loans. While the terms and conditions offered by the banks are similar , there is always a small window open for the borrower to negotiate more favorable terms with a private lender.  The borrower should always do due diligence of the lender credentials before applying especially when very important fixed asset is at stake. The borrower should clear the loan as soon as there is sufficient cash flow for repayment as it will free up the asset from securitization and restore its equity.

 

Businesses can face cash flow crisis anytime. The reasons can be anything from delayed receivables to fulfillment of new orders. A business owner should not wait till the last moment before applying for the loan. If the entire loan amount is not required at a time, the borrower can in some cases have a line of credit agreement with the lender. This allows the borrower to withdraw funds as and when required. It also reduces the interest burden. Approval for private funds for a home equity loan can be within 24-72 hours after the documents are received. Quick processing time, competitive rate and flexible terms are some of the benefits that borrowers can get when dealing with private funders. Just in case you are not sure of how to move ahead, getting in touch with a loan broker can be a good idea. They have experience in dealing with multiple lenders and can offer the best possible deal.