In Focus – SCCCU Blog

Did you know you can fund your small business using a Home Equity Line of Credit (HELOC)? Whether you want to take your existing organization to the next level or start the small business of your dreams, here are some key points to consider:

• Flexibility. A HELOC provides a revolving credit line, allowing you to draw money as needed. This flexibility can help manage cash flow effectively, as you only pay for what you borrow. You can pay only the minimum monthly payment or pay back larger portions to repay your debt faster when your cash flow allows.
• Lower Interest Rates. Compared to credit cards or unsecured personal loans, HELOCs typically have lower interest rates, which can significantly reduce financing costs over time.
• Less Complicated. Business-based lending (especially programs that include government guarantees) can require more paperwork, ongoing monitoring and reporting, and longer approval times. Typically, you can get a HELOC in less than ten days with a simple application, appraisal, and proof of income.
• Use Funds for Different Purposes. Many small business owners use HELOC funds to purchase equipment, invest in advertising, pay for property, or bolster cash flow during slower cycles.

What are the Risks?
While a HELOC is an excellent resource to use for your business needs, be sure to understand the risks:

• Personal Assets. If your business fails to generate expected revenue and you don’t make the payments required on your HELOC, you may lose your home to foreclosure.
• Economic Shifts. Economic changes can affect your business’ success and cause your home value to drop, potentially complicating repayment.

While a HELOC can be a powerful tool for business growth, it requires careful strategic planning and financial discipline. Understanding the pros and cons and aligning this financial strategy with your long-term business goals is crucial. Our financial experts are available to help you start this conversation. Call 831-425-7708 to get started today!

To learn more about our HELOC, click here.