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    3 Replies Latest reply on Jan 5, 2011 4:35 PM by steven_ucf

    Using a HELOC to fund start-up business.

    Newbie

      I've recently started a business completely funded by myself to this point. I'm at the point now where I require additional funding to offset day-to-day operations (including paying myself) and aquiring new assets. I am considering getting a Home Equity Line of Credit to do this because I have plenty of equity in the home. My only concern is that with this being a new business (2 months old) and I have yet to start producing an income with it, that I might have a problem getting the HELOC from the bank. Is the house as collateral and a good credit score enough to get the HELOC?

       

      Any insight would be greatly appreciated.

        • Using a HELOC to fund start-up business.
          Newbie

          Wouldn't it be more prudent to find a seed capital or Angel Investor?  You really don't need to have any fund raising experience, if you engage a company to help you complete your offering documents as well as manage your company’s capital acquisition campaign.

          • Using a HELOC to fund start-up business.
            Bridge Navigator

            Depending on how much you need, you might try an SBA backed micro-loan.  Most loans will st8ll require some typr of collateral; i.e. your house.  You alos need to check the HELOC terms as to what you are allowed to use the money for.

            • Using a HELOC to fund start-up business.
              Newbie

              If your business is only 2 months old, try to make a profit with the money you have before you go putting your house up for collateral.  If you can not make a profit with the money you have invested, what thinks you are going to make a profit with borrowed money?

               

              If you have a proven track record and can rely on a steady income stream from your business, then maybe it wouldn't be such a scary idea.

               

              Figure there is a 95% chance of failing in the 1st 5 years; I wouldn't gamble the house just yet.