HELOC to fund a business

Faster and cheaper than most business loans, with your home on the line if the business struggles.

Reviewed by Shawn Way, NMLS #1007298★ 4.9 from 111 reviewsUpdated October 28, 2026

Compared with business loans

• Speed: weeks, not months.
• Requirements: based on your home and personal income, not business history.
• Risk: personal and secured by your home; many SBA loans require a personal guarantee too.

Taxes

Interest on money traced to business use may be deductible as a business expense. Keep business draws in a separate account and ask your tax preparer.

Set a limit

Decide in advance how much of your equity the business can use. Don't keep drawing to cover losses.

How the options compare

For a brand-new business

A new business with no revenue history rarely qualifies for business credit. That's why many founders use home equity. If you do, size the draw to a specific plan (equipment, inventory, six months of runway) and decide in advance the point at which you'll stop putting in more.

Keep it clean

• Draw into a business bank account, not your personal account.
• If the business repays you, document it as a loan from you to the business with a simple promissory note.
• Keep records of how the money was used. Interest may be deductible as a business expense under interest-tracing rules; ask a tax advisor.

If the business doesn't work

The HELOC remains your personal debt secured by your home. Before borrowing, make sure your household income could cover the payment if the business produced nothing.

Questions people ask

Can my business repay a HELOC I used to fund it?

Yes, but the line is in your name. Keep a written record of business draws and repayments for your accountant.

Would an SBA loan be better than a HELOC for a business?

Often, for larger amounts or long-term equipment and real estate. SBA loans can run 10–25 years and keep business risk off your home, though most require a personal guarantee. A HELOC fits faster, smaller needs.

Before borrowing against your home for a business

• Write a one-page plan: what the money buys, when revenue starts, and the point at which you'd stop investing.
• Confirm your household could cover the payment with no business income for a year.
• Talk to an accountant about structure, tracing and taxes before drawing.
• Check whether a business credit line, equipment financing or an SBA microloan could cover part of the need without your home.
• Keep personal and business money separate from the first draw.

Also asked

Can I use a HELOC to buy into a franchise?

Yes. Franchise fees and startup costs can be funded with home equity, but franchisors often require part of the investment from your own cash.

Will my business lender count my HELOC?

Yes, usually. A business lender looks at personal debts like your HELOC when you personally guarantee the loan, and many SBA loans require a personal guarantee.

Is HELOC interest deductible for business use?

Possibly. HELOC interest on money traced to business use may be deductible as a business expense under interest-tracing rules. Draw into a separate business account, keep records, and ask a tax advisor.

Can my LLC take out a HELOC on my home?

No. The home is yours, so the HELOC is in your name. You can lend the money to your business with a written note.

More in HELOC guides

• Using a HELOC to buy a rental
• HELOC for a down payment
• HELOC for college costs
• HELOC as an emergency fund
• Should you use a HELOC to buy a car?
• Should you use a HELOC to pay for a wedding?
• Should you use a HELOC to invest in stocks?
• Using a HELOC for a home addition

All HELOC guides →