Heloc in CA - Any lenders who can close $1M+ line to reduce “available equity” in primary home??

searcher profile

February 19, 2026

by a searcher from University of Pennsylvania - The Wharton School in San Francisco, CA, USA

For California SBA buyers: did anyone put a $1M+ HELOC / 2nd lien on the primary residence before SBA underwriting to reduce available equity and avoid a lender lien? Did the SBA lender accept it, or did they still treat the equity as available? Any pitfalls on timing, disclosures, or lender pushback? Are their any lenders who provide 1M+ Heloc?
2
22
321
Replies
22
commentor profile
Reply by a searcher
from University of Cincinnati in Long Beach, CA, USA
^redacted‌ thanks for the tag. This qualifies as an ethical disclosure issue. IMHO, use the HELOC proceeds in the deal---good luck‌
commentor profile
Reply by a lender
from Cornell University in Los Angeles, CA, USA
Hi ^redacted‌ - nice to meet you. We broker SBA acquisition loans and work directly with lenders and borrowers on this exact issue regularly. A lot of opinions floating around on this topic, so here's what we know from actual deals. Yes, a HELOC works to reduce available equity below the 25% threshold. Under SBA SOP###-###-#### effective June 1, 2025), lenders are only required to take a lien on personal real estate owned by 20%+ owners if the property has 25% or more equity. Equity is calculated as appraised value minus all outstanding liens. A HELOC counts as a lien. So if your home has 30% equity and you take a HELOC that brings it below 25%, the lender is not required to lien the property. This is a common question from borrowers, and in fact that HELOC can be used for your down payment or post-close liquidity if you move it to your bank account. Make sure that the HELOC is active with a token draw. More importantly, the SBA doesn’t penalize you for tapping equity. One last piece of advice, when you are getting the HELOC, if you tell them its for a business acquisition its going to raise eyebrows. It should be framed as a non-business expense. We have a lot experience financing various companies via the SBA. If you ever need help reviewing a deal, I am happy to help. We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: https://cal.com/francodeguzman/30min. Look forward to chatting!
commentor profile
+20 more replies.
Join the discussion