If you take out a HELOC on your property, be aware that you may not be able to leverage your equity for additional loans.

Naples Daily News reports:

“The Small Business Administration (SBA) is alive and well. However, participating banks are returning to the basic tried and proven underwriting standards of an earlier generation. Startup businesses will find it quite difficult to secure any type of financial assistance unless they can demonstrate a clearly defined business plan and are prepared to invest up to 25 percent of their own money in the venture. These sums must not be tied to other forms of credit, such as a home equity loan, unless the HELOC can be repaid from sources other than the earnings of the business.”

Only take out a home equity line of credit if you anticipate a need for the money. If you don’t have a plan, you may want to save your equity for unexpected needs.

See Also:

Is a HELOC Right for You?

Where to Put Your Home Equity Funds

Tags | Heloc, home equity line of credit