Many small business owners who are in need of financing do not realize the tremendous resources that are available at their fingertips. Those who own a home often have another type of loan available to them, the home equity loan or line of credit.
These loans eliminate some of the problems posed by collateral. If you own a home or part of a home, that ownership stake can be used as collateral instead. This has its pros and cons; it's good because it is available to many more small business owners, but it could potentially become a problem if the borrower is unable to pay back the loan. In this case, the lending institution acquires an ownership stake in the home.
Home equity loans are generally available from banks in two forms-the traditional loan format and the revolving line of credit.
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