Harmony2007

Refinancing home to use home equity to finance business is this a good idea? I would like to expand my business, but I need financial aid. Is refinancing to use home equity to finance business idea , a good idea, or is it to risky.

Using a home quity loan for a business is fine if you can be certain that you can afford the loan payments if your business goes bust. Or if you know you will be ok if you need to sell the home. If you have a family, then of course the risk is much greater. If you are on your own then decide if you can start over should it come to that.

You can also try applying for a micro loan through the SBA. They will require collateral (your home). One difference between a micro loan and a home equity loan is the repayment schedule. A micro loan intermediary can work with you by customizing the terms in your favor.

You will also need a complete business plan. See below for more info on how to write your own business plan:
http://smallbusinessstartup.biz/plan/

Having financed many people out of SBA loans, I can tell you SBA is not the best way to go. They are expensive and do require collateral.
If you have equity in your house, your best option to minimalize risk and get the money you need, is to take a fixed Interest Only 1st Trust Deed. You will know what your maximum payments are no matter what. Equity lines are okay, but you are going to pay a higher rate, and they are going to be adjustable. Take out all the money you will need on the first, and pay down what you don't use. Your payments will reflect the principal loan balance no matter what, you will be able to write off the interest on your taxes, and you are not leaving your butt floating in the breeze when inflation starts to affect interest rates. That would be my suggestion. There are also convertible equity lines that have interest only options, but again they are still higher interest rates. If you have any questions, feel free to email me. I would be happy to talk to you more about it, but starting a business should be about long term survival and short term cash flow. -chris
csk317@yahoo.com