Frequently Asked Questions
Should I use a home equity loan to fund my business?
Using a home equity loan to fund your business is not a good idea to do without the advice from your CPA and attorney in advance. There is also the risk that if your business fails, you may lose your home. Our comments should not be seen as tax or legal advice. Home equity loans are often easier to get from a lender than a business loan. This temptation to take the easier path can get you into trouble later. First, when you mix personal and business finances, an owner runs the risk of “piercing the corporate veil.” This is an old way of saying that you can invalidate the reasons you opened a company in the first place – to protect your family. Even small things, like paying your CPA to do your personal tax return with business funds creates problems. We really, really suggest you talk things out with advisors before you mix even small stuff. Second, when you mix business and personal you can shift ownership. Using the tax return example again if the business pays it gets to keep the records. If you sell the business those records can be used by the buyer in a dispute. We recommend you don’t mix your personal and business affairs. Third, you will want to learn about “Tracing Rules, found in Treasury Regulation. In the blog post by law firm Capell Barnett, the deductibility of interest can become a contested issue in an audit. If you are not sure what to do and need advice on this, reach out to us and we’ll introduce a CPA that is experienced in these matters with company owners.
Is Still There Money Out There To Lend To Me?
There’s a lender for every single loan even the most complex ones. Banks are beginning to tighten credit standards for loans. But there are still excess deposits on many lenders balance sheets. From commercial real estate to credit cards and autos, loan companies are getting tougher on lending even though loan demand also fallen. This is not unusual, as the Fed tightens standards when they believe the companies can take it. The Fed also wants to put to the existing liquidity they made further into the system. So should you worry? No. There are many lenders who are not under the Federal Reserve’s oversight. They have money to lend too.
SBA Programs: How Can I Best Use Them?
Small Business Administrations (SBA) programs are not the fastest way to get you funding, but they are often the least expensive. They ask for a lot of financial documentation, along with personal guarantees that the loan will be paid back. The loan and payment processing are handled by commercial banks. This means if you have a payment question, you will go to the bank and not the government. We work with two programs: SBA 7 a and SBA 504. SBA loans are available for a variety of purposes. These programs can enable you to finance working capital, partner buyout, commercial real estate, equipment acquisition, business acquisition, tenant improvements and ground-up construction. SBA loans were designed to be flexible so you can obtain financing with longer terms (up to 25 years) and lower down payments (as little as 10%). SBA loan programs can be confusing, the variety and strict regulations surrounding these programs can be overwhelming and off putting. Understanding more about these loans can help you decide if an SBA loan is the right solution for your business. It is best if you ask us specific questions about each program to see if they are a good choice for you.