Financing Your Business Without Tapping Home Equity

How to secure optimal financing for your small to lower middle market enterprise without betting your home or other personal assets on your business.

According to the latest quarterly survey conducted by Pepperdine University, two-thirds of smaller companies characterize the current business environment as difficult for raising new business financing. Many small-business owners have been tapping into their personal assets, including home equity, to fill financing gaps.

When business financing is difficult to secure, tapping home equity can be tempting for small-business owners. As many as 38% reported having transferred personal assets to their business over the last three months. Often, this occurs after business owners are turned down by traditional lenders and don’t know where to turn.

Why Some Business Owners Bet the Home

Tapping home equity can be tempting. Reasons vary, but can include the following:      Loans against home equity are easier to find than traditional small-business loans

  • The home may be the small-business owner’s largest asset
  • Such loans come at lower interest rates than most alternatives
  • They can allow a business owner to avoid giving equity to investors
  • The Small Business Administration’s 7(a) loan program generally requires it

Current Challenges

The difficulty today, of course, is that home values are still depressed, despite the gradual recovery of the housing market. As Forbes reported last year, some communities such as Las Vegas, Atlanta, Phoenix, and much of Florida saw prices drop more than in half. In many places, home values are still down 25–40% from peak prices. As a result, fewer owners have the home equity option. Tapping home equity can also be especially uncomfortable for the spouses and families of business owners.

Securing the Financing Your Business Needs

Despite the ongoing challenges many smaller businesses face in securing traditional bank lending, there are actually a wide range of financing options for such companies. For instance, many small businesses don’t appreciate the sheer extent to which they can leverage their business tangible and intangible assets to secure funding. Tapping your home equity should really be only a last resort.

Smaller businesses are frequently locked into an inappropriate financial structure. By examining every aspect of a business, US Capital Partners is able to offer management a choice of the best available pathways to optimal financing. As a direct lender, arranger, and co-lender, US Capital Partners has full flexibility to engineer optimal financing solutions for all its clients

To learn more about how your business can secure the funding it needs, email Jeffrey Sweeney, CEO and Managing Director, at or call
(415) 889-1010.

Jeffrey Sweeney