SBA: Use a HELOC to keep your primary residence out of it?

searcher profile

September 12, 2023

by a searcher in Petaluma, CA, USA

Do SBA lenders frown upon borrowers taking out a HELOC that reduces their home ownership below 25% such that the SBA won't ask for a lien on the home?

The cash would be useful as working capital so I'm considering it but don't want to create problems for the deal.

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
If you have less than 25% equity in your home, the SBA does not require the Bank to take a lien on your home as additional collateral. Availability on a home equity loan does count against the equity available in the home. However, that does not mean a Bank still will not take the home as additional collateral. Even though it is not required by the SBA, some lenders will still require it to help shore up the deal. I hope this helps to clarify. If you have more questions on SBA loans, you can ping me here or directly at redacted
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Reply by a searcher
in Boca Raton, FL, USA
Thank you for commenting Brad. How is the home value determined during SBA underwriting? Is it based on the most recent lien on the property, state/county value, or is an updated appraisal required? ^redacted‌
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