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Compare business equity loans

Potentially lower your interest rate by using the equity in your property as security for a loan.

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Editor's choice: First Down Funding business loans

First Down Funding business loans logo
  • Works with bad credit and most industries
  • Only 100 days in business required
  • No credit check
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As a business owner, you’re likely always searching for ways to leverage your liquid assets to expand your business. If you have a piece of property, you may be able to use its equity as security for a loan. You don’t have to own the property outright, and you could qualify for much lower rates than you would with an unsecured loan. Just be aware that this means added risk — should you default, you may lose your property.

How do business equity loans work?

Business equity loans work similarly to home equity loans — you leverage the amount of equity you have in a piece of property you own to act as security for a loan. Because of this security, you can generally expect lower interest rates and better terms, especially if the property has a good deal of equity.

Lenders will require you to submit a business proposal when you apply for a loan and to have your property evaluated. This allows lenders to determine if lending to your business is a good investment, and if so, the terms your business qualifies for. You should be able to find loans with variable and fixed rates and interest-only repayment periods. However, terms can be quite diverse, so you’ll want to take your time looking for a lender that matches your business’s needs.

Compare top business loan lenders

Data indicated here is updated regularly
Name Product Filter Values Loan amount APR Requirements
First Down Funding business loans
$5,000 – $300,000
Fee Based
At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 400
Alternative financing up to $300K with highly competitive rates.
Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.
ROK Financial business loans
$10,000 – $5,000,000
Starting at 6%
Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales
A connection service for all types of businesses — even startups.
OnDeck small business loans
$5,000 – $250,000
As low as 9.99%
600+ personal credit score, 1 year in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Rapid Finance small business loans
$5,000 – $1,000,000
Fee based
Steady flow of credit card sales, bad credit OK
Fundbox business loans
$1,000 – $100,000
4.99
You must have an established business.
Get flat rate, short-term financing based on the financial health of your business, not your credit score.
Kickpay e-commerce business loans
$20,000 – $1,000,000
Not applicable
At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.
Get a loan for your e-commerce business based on your sales history.
LendingClub business loans
$5,000 – $500,000
12.15% to 29.97%
12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
With loan terms that vary from 12 to 60 months, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
Monevo business loans
$500 – $100,000
3.99% to 35.99%
Credit score of 500+, legal US resident and ages 18+.
Use this connection service to get paired with a loan you can use for business.
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How can a business equity loan benefit my business?

  • Discounted rates. Because you’re using your property as security, the lender faces less of a risk in the event that you default on your loan. This often results in lower rates and better terms for you.
  • Available to all business sizes. As long as you have equity you can use, some lenders may be willing to overlook new businesses or those with a less-than-perfect track record.
  • Variable loan amounts. Lenders may be able to finance quite a bit of your equity, which means you’ll be able to borrow more than your business might otherwise qualify for.

What are the drawbacks of a business equity loan?

  • Greater risk. Using your residential or commercial property as security comes with inherent risks, especially with a business loan. If you default on the loan, your property may be taken by the lender to recoup its losses.
  • Requires property. While you don’t have to own the property outright, you still need to have a property to use as an investment. If your business doesn’t have a physical location or is renting a unit, you won’t qualify for a loan.

How to determine your property's equity

Because business equity loans are similar to home equity loans, you can use the same type of equity calculation for each. For example, if your business owns a $350,000 property and has $100,000 left on the mortgage loan, your business has $200,000 of equity.

This doesn’t mean you’ll be able to borrow $200,000. Most lenders will only allow you to borrow 80% of the total equity in your property. Depending on the equity your business has and the amount you have left on your loan, it may be worthwhile to compare other secured business loans to see if there’s another way to borrow the amount you need.

How do I compare business equity loans?

  • Property type. Some lenders may only let you use either a residential or commercial property as security, although some may let you use either.
  • Loan-to-value of equity. Lenders will allow you to borrow up to a certain amount of the value of equity in your property, usually up to 80%, though it may depend on if it is a commercial or residential property.
  • Interest rate. Business equity loans may have higher interest rates than home loans due to the higher risk the lender takes on with business loans, but it will generally be lower than an unsecured business loan of equal value.
  • Loan amount and terms. The loan amount and terms you are approved for will depend on the business proposal you put forward, the financial position you’re in and the amount of security you’re able to offer.
  • Additional features. Some lenders may offer additional features with business equity loans, such as a split loan option, interest-only repayments and other features that you may want to take advantage of.

Bottom line

A business equity loan can provide funding for a business that already has a property. Many lenders offer lower rates because of the lower risk, but remember: less risk for the lender results in more risk for you. Your property will be on the line, whether you choose to use a commercial or residential property. Compare your other business loan options to find more secured and unsecured loans that can be used to fund your next business project.

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