How to Use a HELOC to Fund a Business (2026)

A home equity line of credit (HELOC) lets you borrow against the equity in your home and use the cash for almost anything, including funding a business. It’s one of the few financing options open to business owners who don’t yet have the revenue or time in business that traditional lenders require.

Homeowners are sitting on near-record equity. Mortgaged homeowners held about $11 trillion in tappable home equity as of March 2026, according to ICE Mortgage Monitor. That’s fueled growing interest in HELOCs as a business funding tool, but tying business risk to your home is a serious decision.

What is a HELOC?

A HELOC is a revolving line of credit secured by your home. Instead of receiving a lump sum, you get a credit limit you can draw from as needed, similar to a credit card, and you only pay interest on what you actually borrow.

Most HELOCs have two phases:

• Draw period: Typically five to 10 years. You withdraw funds and usually make interest-only payments.
• Repayment period: Typically 10 to 20 years. Borrowing stops and you repay principal and interest.

Rates are usually variable and tied to the prime rate, so payments can rise or fall over time.

Can you use a HELOC to fund a business?

Yes. Most HELOC lenders don’t restrict how you spend the funds, so you can legally use one for business purposes, including startup costs, equipment, inventory, marketing or covering cash flow gaps. A small number of lenders may include language against business use in their agreement, so check your loan terms before drawing funds for that purpose.

Lenders base approval on your home equity and personal finances rather than business revenue or time in business, so a HELOC can be easier to qualify for than a business loan, especially for a new or early-stage business.

How to use a HELOC to fund a business

1. Check your home equity. Lenders generally let you borrow up to a combined loan-to-value ratio of 80% to 85%, meaning your mortgage balance plus the HELOC can’t exceed that share of your home’s value.
2. Compare HELOC lenders. Rates, draw periods and fees vary. Look at banks, credit unions and online lenders.
3. Apply and get appraised. The lender will verify your income, credit and the home’s current value.
4. Draw funds as needed. Once approved, withdraw only what your business requires to limit interest costs.
5. Repay before the draw period ends. Plan for higher payments once you move into the repayment period.

See the best HELOC and home equity loan rates available to you today

Use our tool to see estimated rates from top lenders based on your location and financial details. Select whether you’re looking for a home equity loan, HELOC or cash-out refinance. Enter your ZIP code, credit score and information about your current home to see your personalized rates.

Pros of using a HELOC for business funding

• Easier to qualify for. Approval relies on your home equity and personal finances, not business revenue or time in business.
• Lower rates. Costs less than credit cards or many unsecured business loans.
• Interest only on what you draw. You’re not paying interest on funds you haven’t used.
• Reusable funds. You can borrow again during the draw period as you repay.
• Few spending restrictions. Most lenders don’t limit how you use the money.

Risks of using a HELOC for business funding

• Your home is collateral. If your business can’t cover payments and you default, you risk foreclosure.
• Variable rates. Payments can increase if benchmark rates rise.
• Mixes personal and business finances. A business downturn can directly threaten your household finances.
• Payment shock. Interest-only payments during the draw period can jump sharply once principal repayment begins.

How to qualify for a HELOC to fund a business

Requirements vary by lender, but most look for:

• Sufficient home equity, usually at least 15% to 20% after the new line
• A credit score in the mid-600s or higher
• A manageable debt-to-income ratio
• Proof of stable income

Lenders assess you as an individual borrower, not your business, so most don’t require a business plan, revenue history or time in business the way a business loan or SBA loan would.

Business HELOC vs. personal HELOC used for a business

Some banks and credit unions offer a “business HELOC,” which is still secured by your home but opened in the name of your business or LLC, with you as guarantor. A business HELOC can help keep business and personal transactions separate for bookkeeping and tax purposes, but your home remains the collateral either way. A standard personal HELOC used for business purposes works the same financially, just without the separate business-named account.

Alternatives to a HELOC for business funding

• Business term loans. A lump sum repaid over a fixed schedule, based on business qualifications rather than home equity.
• Business lines of credit. Revolving credit tied to the business itself, not your home.
• SBA loans. Government-backed loans with longer terms and competitive rates, but a slower approval process.
• Microloans. Smaller loans, often from nonprofit lenders, aimed at startups and underserved entrepreneurs.
• Business credit cards. Useful for smaller, short-term expenses without touching home equity.
• Personal savings or investors. Avoids debt and collateral risk entirely, but means giving up equity or liquidity.

Compare business lenders

6 of 6 results

Updated regularly

Finder Score	Min. Amount	Max. Amount	APR	Requirements
Promoted 9.9 Excellent Pinnacle Funding	9.9 Excellent	$10,000	$5,000,000	Varies by loan type	525 credit score, 6+months in business, $180,000+ annual revenue	Apply in minutes with funding as fast as 24 hours and zero impact to your credit score.	Go to siteView details Compare product selection Compare	loading
Promoted 9.6 Excellent Lendio business loans	9.6 Excellent	$1,000	$10,000,000	Varies by lender	Operate business in US for 6 months or more, have a business bank account, minimum 520 personal credit score, at least $8,000 in monthly revenue.	Submit one simple application to potentially get offers from a network of over 75 legit business lenders.	Go to siteView details Compare product selection Compare	loading
Promoted 9.5 Excellent Fundera business loans	9.5 Excellent	$2,500	$5,000,000	Varies by lender	$60,000+ of annual revenue, 600+ personal credit score, in business for 6+ months	Get connected with short-term funding, SBA loans, lines of credit and more.	Go to siteView details Compare product selection Compare	loading
9.5 Excellent Lendzi	9.5 Excellent	$5,000	$20,000,000	Varies by lender	Minimum credit score of 500, minimum annual revenue of $240,000, preferably one to two years in business	Compare lending options and get funded fast.	Go to siteView details Compare product selection Compare	loading
8.8 Great PayPal LoanBuilder	8.8 Great	$5,000	$300,000	Fixed fee (amount not disclosed)	Minimum credit score not disclosed, 9+ months in business, at least $33,300 in annual revenue	Go to siteView details Compare product selection Compare	loading
8.8 Great Fora Financial business loans	8.8 Great	$5,000	$1,500,000	Factor rate of 1.05-1.5	6+ months in business, $240K+ annual revenue, 570 minimum credit score	Get approval decision for funding in minutes for up to $1,500,000 without affecting your credit score. Best for companies seeking large business loans.	Go to siteView details Compare product selection Compare	loading

loading

Load More

Showing 6 of 6 results

Compare other products

We currently don't have that product, but here are others to consider:

Looking for other options? Check out these similar products.

How we picked these

What is the Finder Score?

The Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.

To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.

Read the full breakdown

Frequently asked questions

• Is it a good idea to use a HELOC to start a business?

  It can work if you have a solid repayment plan and stable income outside the business, since payments continue whether or not the business succeeds. It's riskier for ventures with unpredictable early cash flow.

• What can you use HELOC funds for in a business?

  Most lenders place no restriction on use, so funds can go toward equipment, inventory, marketing, payroll or working capital. Always confirm your specific loan agreement doesn't exclude business use.

• Do you need good credit to get a HELOC for a business?

  Most lenders want a credit score in at least the mid-600s, though requirements vary. A higher score typically gets you a better rate.

• What happens if my business can't repay the HELOC?

  Since your home secures the loan, missed payments can lead to foreclosure, regardless of why the business struggled.

To make sure you get accurate and helpful information, this guide has been edited by Richard Laycock as part of our fact-checking process.

Written by

Megan B. Shepherd

Editor, Loans & Insurance

Megan B. Shepherd is a personal finance expert and editor for loans and insurance at Finder. Her personal finance expertise has been featured on Forbes, Nasdaq, MediaFeed, Fox News, Time, Reviews.com, and carinsurance.com, adding invaluable information related to personal loans, financial strategies and smart borrowing tactics. Megan graduated from the University of Texas at Dallas with a BS in Business Administration with an entrepreneurial focus. She's worked as a certified financial adviser and has earned certificates of completion from A.D. Banker & Company. See full bio

Megan B.'s expertise

Megan B. has written 134 Finder guides across topics including:

• Personal loans, business loans and home loans
• Underwriting guidelines
• Life, disability, car, health, accident, critical illness, dental and vision insurance
• Policy comparison