- The SBA 7(a) has clearly defined loan property lien requirements. For loans over $350,000 the SBA requires that a lien be placed on available equity of the borrower’s personal real estate including residential and investment property.
- The SBA does not require lenders to collateralize a loan with personal property if the borrower has less than 25% equity of fair market value.
- For loans under $350,000 some banks still require a lien on personal property if there is more than 25% equity available.
- If you take a HELOC before you submit your financial package, and have less than 25% equity in your house or investment properties, then a lien will not be required. HELOCs typically offer interest only rates and the full balance from your mortgage and HELOC are deducted from cash flow.
- If your spouse owns 20% or more of the “Small Business Applicant” the SBA instructs lenders to consider taking jointly owned investment or residential property as collateral.
Checkout AdvisorLoans.com for more information about SBA and conventional lending options for advisors.
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