Banks That Offer a HELOC to Retire Business Debt

The Quick Read: A home equity line is secured by your property and underwritten on you personally, so the debt you pay off matters less than your credit, your equity, and your debt-to-income ratio. Each lender sets its own rules on how the money can be used. The right lender depends on your property, credit profile, and leverage need, which is why a broker that shops several wholesale lenders can help.

• On an investment property, the line tops out at 70% CLTV (combined loan-to-value) and needs a 700 credit score, with a $500,000 maximum line.
• On a primary residence, 90% CLTV exists only at a 720-or-better credit profile, and only up to $500,000. A larger line, up to $750,000, is possible on a primary residence at 75% CLTV with a stronger credit profile.
• At least 75% of the line is drawn at closing, which suits a one-time payoff better than a reserve you plan to tap later.
• LLCs cannot hold title on these lines, so a rental deeded to an entity needs a vesting change or a different product.
• When the collateral is a rental that covers its own payment, a DSCR cash-out refinance is often the better comparison.

Which Banks Actually Offer This?

The honest answer is a category, not a list. Large depository banks, credit unions, and non-bank equity-line providers all write home equity lines. None of them runs a separate product for business debt.

Lenders sometimes advertise a business HELOC. That is a marketing label on an ordinary home-secured line. Bills.com explains that you typically apply as an individual homeowner and your home secures the line. Some lenders will open a line in a company’s name, but even then a personal residence commonly serves as collateral.

So the question “which banks” breaks into three smaller ones. Does the lender let proceeds retire business obligations? Does it lend against a rental or only against an owner-occupied home? Does its documentation style fit a self-employed owner? Each lender answers those differently.

Lendmire is a mortgage broker, not a lender. It works with a network of wholesale equity-line lenders and matches the scenario to the program. The best program for your situation depends on occupancy, credit, equity, and how much of the line you need on day one. This article does not rank or name any lender, because no single name fits every file.

Key Terms Defined

CLTV (combined loan-to-value): Your first mortgage plus the new line, divided by the property’s value. It caps how much equity you can borrow against.

DTI (debt-to-income ratio): Your monthly debt payments divided by your monthly income. Lenders use it to judge whether you can carry another obligation.

Draw period: The stretch when you can borrow from the line and, on the programs below, pay interest only.

Repayment period: The stretch after the draw period, when the balance amortizes down.

Personal guarantee: Your promise to repay a business debt from your own assets if the company cannot.

Commingling: Mixing personal and business money in the same account, which muddies the paper trail of where funds went.

Vesting: The name on the property’s title. These lines require an individual or a revocable living trust.

DSCR (debt service coverage ratio): Monthly rent divided by the property’s full monthly payment, meaning principal, interest, taxes, insurance, and any HOA dues. That payment total is called PITIA.

How Underwriting Treats a Business Debt Payoff, Step by Step

Underwriting treats the line as a consumer-style loan. The business is usually not the borrower. Here is the sequence.

Step 1: Inventory the debt. List each balance: business cards, equipment loans, merchant cash advances, revenue-based financing, and term loans. Mark which ones carry your personal guarantee. Those are the debts that already point at you.

Step 2: Confirm the equity. Equity is the home’s value minus what you owe on the mortgage. A federal home equity guide says lenders typically require you to keep at least 10% to 20% of the home’s value as equity. That is a market-wide statistic. On the network’s programs, the ceilings are set by occupancy and credit tier, covered in the next section.

Step 3: Qualify. The lender reviews credit, income, and DTI. The network’s DTI limit is 50% at most, falling to 45% for credit profiles from 600 to 679, so any ratio above 45% requires a 680 minimum. Qualification uses the interest-only payment calculated on the maximum draw. Income qualification runs on documented income under the applicable program, subject to lender guidelines.

Step 4: Value the property. Lines at or below $500,000 ordinarily run an automated valuation with no traditional appraisal, though a higher CLTV may require a secondary valuation. Every line above $500,000 requires a full appraisal. You can also request a full appraisal in any case.

Step 5: Close and pay off. At least 75% of the line is drawn at closing. That fits a payoff well: you size the line to the debt you are retiring. After closing, later draws carry a minimum, $1,000 on the program that states one.

Step 6: Live with the repayment structure. Here is where borrowers get surprised, so the next section covers it in detail.

What the Network’s Programs Allow

Ceilings depend on how the property is used. This table shows the range by occupancy.

Those are ceilings, not promises. On a primary residence, a 700+ profile reaches 85% CLTV up to $500,000, and 640+ reaches 80%. A line above $500,000 is primary-residence only, caps at 75% CLTV, and needs a stronger credit profile and a full appraisal. Every figure is subject to lender guidelines and a full file review.

Two draw structures exist on primary residences and second homes. One runs a 3-year interest-only draw followed by a 17-year repayment. The other runs a 5-year draw followed by a 25-year repayment. Investment lines use the 5-year draw and 25-year repayment structure only.

The line is a standalone product in first or second lien position. Pricing floats through both the draw and repayment periods and never converts to fixed. Equity-line placements run through 16 full-service states, which is narrower than Lendmire’s DSCR investor footprint of 41 markets, including Washington, D.C.

Where the Rules Break

Payments rise after the draw period. A federal HELOC explainer says repayment periods across the market often run ten or 20 years. It adds that payments can be significantly higher once repayment begins. On the network’s programs, the repayment periods are 17 or 25 years, but the same step-up from interest-only to amortizing applies.

The line can be frozen. That same explainer says a lender may block draws if the home’s value falls significantly or if it doubts your ability to pay. Because most of this line is drawn at closing, a freeze matters less for a payoff than for a reserve.

Unsecured debt becomes secured debt. A card issuer holds no lien on your house. A home-secured line does. The explainer warns that if you fall behind, you could lose the home. A personally guaranteed business debt already follows you personally, but a lien adds the property itself.

A second lien eats equity. The line reduces the equity available for any later refinance on that property, including a cash-out refinance.

Rental use can be restricted. Some lines carry terms that limit renting out the home, so read the terms before you sign. On this network, investment-property lines exist, but they carry the 700 minimum and the 70% ceiling.

Business debt may still count against you. Debts on your personal credit report generally count in DTI unless the file shows the business pays them. Whether a given lender accepts that evidence depends on its guidelines and your payment history.

The deed matters. Only an individual or a revocable living trust can hold title. LLCs, corporations, partnerships, and irrevocable, blind, or land trusts cannot. A rental already deeded to an LLC needs a vesting change or a DSCR cash-out instead, subject to program terms.

Property type matters. Single-family, 2-4 units, PUDs, townhomes, and condominiums, including non-warrantable ones, are eligible. Manufactured homes, co-ops, condotels, log homes, and commercial, mixed-use, or agricultural-zoned properties are not offered. In several states, a property listed for sale within the past 60 days is ineligible.

History matters. A bankruptcy needs 4 years of seasoning from discharge or dismissal. A foreclosure is treated differently by each program. One seasons it at 7 years, with deed-in-lieu, pre-foreclosure, and short-sale history at 4. The other declines that history regardless of age.

Exposure has limits. A borrower is limited to three lines. A borrower with more than 15 financed properties is not eligible.

A Worked Example Using Percentages

Picture an investor whose rental carries a first mortgage equal to 50% of its value. On an investment property, the CLTV ceiling is 70%, so the new line could reach 20% of value at most. That assumes a credit score of 700 or better and a payoff target under the $500,000 maximum. This is a modeled scenario, not market data. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.

Now suppose the payoff target needs more than that. A standard DSCR cash-out refinance on a rental tops out at about 75% LTV across most of the network, so it can reach further than the 70% line ceiling. For short-term-rental collateral, cash-out tops out at 70%. The trade is that a cash-out replaces the first mortgage rather than sitting behind it. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.

HELOC or DSCR Cash-Out Refinance?

Compare the two when the collateral is a rental. For the broader product picture, see the complete DSCR loans guide.

A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. About 6 months of seasoning is the common expectation on a cash-out. Coverage of 1.00 is where many select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted.

Clearing 1.00 does not mean positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation.

This one is closer than it looks. A line keeps your existing first mortgage in place, which matters if that mortgage is cheap to hold. A cash-out resets everything but can reach more equity on a standard rental. The right call depends on the first mortgage balance, the rent coverage, and how much debt you are retiring.

When to Skip It

Skip the line if any of these describe you:

• The business debt is unsecured and you cannot see the business surviving the payoff.
• Your personal DTI is already near the 50% limit.
• You plan to keep drawing for operating expenses, since most of the line comes out at closing.
• The only property with equity is deeded to an LLC and you cannot change vesting.
• You would be tapping a rental that you rely on for a later cash-out refinance.

For related ground, Lendmire’s piece Banks That Offer a DSCR HELOC for Debt Payoff or Business Reserves covers a neighboring question.

What to Gather Before You Apply

Have these ready:

• Payoff statements for each business debt, with account numbers and balances.
• A current mortgage statement for the property.
• Government ID and credit authorization. The score model uses a single bureau, keyed to the primary wage earner, and the report can be no more than 90 days old at closing.
• Income documentation under the applicable program.
• Title and vesting documents, including trust paperwork if applicable.
• Proof of insurance on the property.

Keep personal and business money in separate accounts. A clean paper trail makes the file easier to review and your records easier to defend later.

Matching the Program to the File

The best program for your situation turns on property type, credit, equity, leverage, and documentation. If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Lendmire arranges these loans through select wholesale lenders, and every figure is subject to lender guidelines and full file review. It is not a commitment to lend.

A payoff plan works best when the equity is real and the rent or income behind it is documented, because the property is what ends up carrying the debt.

About Lendmire

Lendmire, NMLS# 2371349, is a mortgage brokerage that arranges home equity lines of credit through wholesale lending partners in its 16 full-service states. Lines on primary residences, second homes and investment properties are each reviewed individually by the lender under the program’s occupancy, credit and combined-loan-to-value guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Bills.com – HELOC for business

2. CFPB – Using home equity guide

3. CFPB – What is a HELOC