Using your home as collateral in order to secure a loan for major purchases used to be a way of life for many homeowners. However, in today’s world, gone are the days where you can use your home as collateral for just about anything rather today you have very few loan options at your disposal if you want to use your home as collateral—enter business purpose loans.
Business purpose loans are not necessarily all the rage right now and oddly enough it’s not because they aren’t a great option for individuals who are seeking additional financing. Instead, business purpose loans are just that—for business purposes. Of course, many people did not and still don’t like this restriction that has developed in recent years. But, truth be told this fairly new restriction on using the equity in one’s home is actually doing more good than harm.
For instance, everyone remembers the housing market a few years ago and the horrible state of the economy. It was at this time, unfortunately, that people were essentially borrowing against their homes for expensive non-everyday purchases and when they could no longer afford the items they purchased so too went the collateral for the loans. In fact, many people outright lost their homes for defaulting on the loan itself. Thus, you can see why it was time for a serious change.
With that being said, securing a loan using your home as collateral can be extremely beneficial for your business. For example, you can use these particular loans to start a business (obviously) or improve your business (make upgrades or new construction, new equipment or inventory, etc.). Furthermore, you can use these particular loans to even pay off business-related debt that you incurred if you so choose. Moreover, many or rather some of the lenders that offer loans for business purposes want to now ensure that you can still keep your home in the event of default or inability to pay.
So at this point, you may be asking yourself, what does this have to do with me? Well, the answer is nothing, unless you want to use your home as collateral in order to start or maintain or improve your business. If that’s not something you are interested in at the moment or you are perfectly content running your startup from your home office then, by all means, it’s your business and you can run it how you want to. But if, on the other hand, you are interested in the potential of these particular loans, which more than likely you are, then why not take some time to do a little research and find out how a loan of this nature can work for you.
Just as a side note, additional financing for your business, in general, is never a bad idea if it will ultimately help your bottom line. Ultimately, there are dozens of reasons you may need a loan of this nature; so do your homework and remember there’s never any gain without a little risk.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.