Get Your Business Funded: Creative Methods for Getting the Money You Need

How It Works

A typical equity line of credit can be for anywhere between, say, $25,000 and $1 million; could be more, could be less. The collateralized real estate in all likelihood will need to be either owner occupied or investment property, although in a commercial setting, the collateral could also be accounts receivable or tangible business assets such as equipment or vehicles. The approval process should be fairly quick, less than a month, certainly. Once approved, you will receive a checkbook and a credit card tied to the credit line so that you can access the capital in a way that works best for you.

How much credit will you get? Let's say that you need an equity line of credit and decide for some reason to use your home as collateral. How much credit should you expect to be extended to you? Many lenders, especially today, limit lines of credit to, say, no more than 75 percent of the home's appraised value, and then subtract from that the mortgage to calculate the credit line. For the sake of argument, let's say that:

The house is valued at	$100,000
times 0.75 equals	$75,000
And you still owe	$50,000
So you might get an equity line of	$25,000

If you (wisely) use a business asset as collateral, the analysis is still roughly similar.

Costs. There are several fees that you will pay when applying for and receiving an equity line of credit. Aside from the typical bank fees (application fee, document preparation fees, etc.) expect to also pay for a property appraisal, ...