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

searcher profile

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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commentor profile
Reply by a lender
from University of Missouri in Denver, CO, USA
I was just going to say the same thing as a few others have mentioned. If a loan is under $500k I have had success with my credit team not taking a home as collateral. Otherwise, obviously with SBA if you don't live in TX you would have to pledge if you have >25% equity and are not fully collateralized without it.

Maybe look for smaller deal requests?
commentor profile
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.
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