FREQUENTLY ASKED QUESTIONS

1. How will having a home equity line of credit affect your application for a commercial loan?

All outstanding debt will be considered when applying for any loan. The lender will look at your finances to see if you can afford to take on additional debt. In the case of a home equity loan, they will look at the total amount available, not the current amount owed. So if you owe only a few hundred, but the equity line is for 50,000, when you apply for the commercial loan the loan officer is going to look at it as if you owed the entire 50,000 because you could go out the next day and max it out.

2. How much collateral does a business loan require?

The simple answer to your question is none. But, having said that, a bank will need to know and be able to trust their own judgement as to how viable your business is likely to be. Sometimes that can be a high hurdle.

3. How can one get a business loan without giving personal credit scores?

You will need at least three credit cards and five vendors under the business’s name and not your Social Security number

4. Would it be a good idea as a business owner to retire all loans much before their term?

That could depend on a few factors, including your cash flows needs and the relative value of having the capital liquidity versus not paying the interest on it. In other words, if you estimate that your business could earn a higher return using the money yourself, don’t give it back to the bank early.