Any options for raising debt without putting up your home as collateral?

July 23, 2024

by a searcher in Loudon, NH, USA

My wife and I both own our home jointly. Her risk tolerance is not the same as mine and is not comfortable with our home being used as collateral with a bank loan. Are there any options for me to close a deal without having to put up the home? It seems that is a requirement of any SBA or even non SBA bank loan. Short of seller financing, are there any other options out there?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Great question. Conventional lenders might not require the home to be pledged, but they are likely going to require more money down to finance a transaction than you can get away with using the SBA 7A loan program.

SBA lenders only require the home to be pledged if there is a shortfall of collateral to support the transaction. If you have enough collateral to fully support the loan, then they do not require the home to be pledged. However, on most business purchases, if there is goodwill exposure then the home often be required.

My recommendation is to get a home equity loan to use up the equity in your home. If you have a home equity loan, whether there is a balance outstanding or not, and you have less than 25% equity in your home, the SBA lender is not required to take your home as additional collateral.

I would be more than happy to get on a call to discuss in more detail at any time what options you have. You can reach me here or directly at redacted Good luck.

Reply by a searcher
from Biola University in North Tustin, CA, USA

^redacted‌‌ I am in the same boat, don’t mess with the wife’s nest! My Live Oak rep says if loan amount is under $500K then they won’t require home as part of PG. I also have the wrinkle of ROBS rollover requiring min 51% ownership in any investment so limited in deal size making not very attractive for most investors. So, I feel sorta pigeonholed into a ~$1M type acquisition with big seller note (also not so attractive for many sellers, even though may be better for taxes) and giving up some equity that would buyout at later date. Other than that, I’ve received feedback along the 75% LTV route as well as transferring title into wife’s name and she has no participation in business (others told me that SBA may look back 3+ months to make sure you are not gaming the system). Good luck, pulling for you! Let us know how it turns out.

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