The Quick Read: A hard money flip loan is underwritten on the deal, while a business line of credit is underwritten on you and your company. Pick the flip loan when the property, budget, and exit plan are strong. Pick the line when your business history is strong and you want reusable cash.
- A flip loan looks at the property, the rehab budget, the after-repair value, and your exit.
- A business line looks at your credit, how long the company has operated, and its financials.
- A flip loan is closed one deal at a time. A line is set up once and reused.
- Rehab money on a flip loan is released in draws against completed work. A line has no such built-in budget check.
- Many investors use a flip loan for the property and a line, if they already have one, for gaps. Both are subject to lender guidelines.
Here is the honest answer on who each option is for. A hard money flip loan suits an investor whose strength is the project: a clear scope of work, a believable resale value, and a plan to sell or refinance. A business line of credit suits an owner whose strength is the company: several years of operating history, steady deposits, and good personal credit.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
That split matters for a business owner. If your operating company earns steady revenue, a line may be easy to obtain, but the money is sized to the company and not to the flip. If flipping is the business, the company’s deposits can look lumpy, and the line may be harder to get or smaller than you need. Lendmire arranges hard money through a wholesale network of lenders across 41 markets, including Washington, D.C.
Side-by-Side
The table shows how the two products differ in structure. It leaves out pricing on purpose, because pricing lives in the calculator and varies by file. Hard money figures reflect select wholesale-network guidelines and vary by lender, property, and experience. The line column shows published industry norms with typical qualifiers.
| Factor | Hard Money Flip Loan | Business Line of Credit |
|---|---|---|
| Review basis | Property, budget, ARV, exit | Owner credit, business history |
| Documentation | Entity papers, purchase contract, scope of work | Traditional personal-income documentation, bank statements, financials |
| Property types | Non-owner-occupied 1-4 units | Not tied to any property |
| Entity vesting | Often an LLC, subject to program terms | Usually the operating business |
| Structure | Interest-only, 6-18 months | Revolving: draw, repay, redraw |
| How funds are released | Purchase at closing, rehab in draws | Draw anytime up to the limit |
| Liquidity expectations | Investor brings the balance of project cost | Lender reviews business cash flow |
| Collateral and recourse | The flip property; guarantee terms vary | Often a personal guarantee; may be secured |
| Exit | Sale or refinance into a rental loan | Repay from business cash or sale proceeds |
Key Terms Defined
Loan-to-cost is the loan amount as a share of what the project costs: purchase price plus rehab budget.
After-repair value (ARV) is the estimated worth of the property once the work is finished. Flip lenders cap the loan against it.
Holdback is the part of the loan held back for rehab. The lender releases it in draws after verifying completed work.
Revolving line is a credit limit you can borrow against, repay, and borrow against again.
Personal guarantee is your personal promise to repay if the business cannot. Many business lines call for one.
How Each One Is Underwritten
A flip loan asks whether the finished property can repay the debt. The lender reviews the purchase agreement, the budget by trade, the as-is value, and the ARV. Experience still matters. Across our wholesale network, most programs sort investors by completed projects, and the strongest leverage goes to people with a track record.
A business line asks a different question: can the company repay from its earnings? The lender reviews your personal credit, time in business, revenue, and cash flow. Banks tend to want strong credit and several years of history. Online lenders often accept a shorter history, though terms differ by lender. The limit is not sized against any purchase price or ARV, so the line does not know or care what the flip is worth.
What a Hard Money Flip Loan Looks Like
On most files in the network, fix-and-flip leverage is set by completed projects. It runs up to 93% of project cost at five or more completed projects, 90% of project cost at two or more, and 85% of project cost with fewer than two. Every tier is capped at 75% of after-repair value. Up to 100% of the rehab budget can fund in draws against completed work. That is a rehab-budget figure, not a purchase LTV. Bridge purchases without rehab go up to 80% of purchase price. The top tier is reserved for experienced investors, and every figure varies by lender, property, and experience.
Terms run 6 to 18 months, interest-only, with no prepayment penalty. Loan amounts go up to $5,000,000, and larger by exception. The minimum credit score is 620, with extra conditions below 660. First-time investors can qualify at the lower leverage tiers. Collateral is non-owner-occupied residential property of one to four units. Underwriting stays asset-based, meaning property, plan, and exit.
There is no true 100% purchase program. When you see 100% in a flip conversation, it refers to the rehab budget funded in draws.
What a Business Line of Credit Looks Like
A revolving line works like a pool of money. You draw what you need, repay it, and draw again. Interest accrues only on the amount drawn. A secured line pledges collateral, such as property or other assets. An unsecured line does not, though lenders often ask for a personal guarantee anyway.
Three products carry the “line of credit” label, and they are not the same. An unsecured business line is underwritten on the company. A property-secured revolving facility is underwritten partly on the collateral. An equity line on a home is a consumer product. This article compares the first with a flip loan.
Some tax questions come up when you use a line, because the use of funds matters. Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
When a Hard Money Flip Loan Is the Better Fit
Choose the flip loan when the deal is the strongest part of your file. That is common for these investors:
- Flippers whose income is the flipping. Their deposits can look uneven to a line underwriter. A flip lender looks at the deal instead.
- Newer entities. A line leans on operating history. A flip loan can work for a newer entity when the project and the guarantor hold up, subject to lender guidelines.
- Investors who want a budget check. Draw inspections act as a built-in control. The lender confirms the work before money moves, which keeps scope creep visible.
- Investors who want the debt kept separate. A flip loan is typically the entity’s obligation, secured by the flip property. A line may draw on your personal credit profile and a personal guarantee.
- Investors planning a refinance. The loan is structured around an exit, either a sale or a refinance into a rental loan.
Picture a business owner with a landscaping company and one flip under contract. The landscaping company is healthy, but the flip is a separate venture with its own purchase contract, scope, and resale plan. The flip loan keeps the two apart. The loan lives with the flip entity, and the landscaping company’s credit capacity stays untouched.
The trade-offs are real. You bring cash for the portion of project cost the loan does not cover. The loan is closed per deal, so each project means a new file. The term is short, so the exit has to be ready.
When a Business Line of Credit Is the Better Fit
Choose the line when the company is the strongest part of your file and the need is flexible.
- Established operating businesses. If your company has years of history and steady revenue, a line can be easy to arrange and easy to reuse.
- Uncertain budgets and timelines. A line suits costs you cannot pin down. You borrow only what you use.
- Serial flippers. Once the line is in place, you do not file a new application for every project.
- Gap funding. A line can cover a down payment, carry costs, or a rehab overrun that a flip loan will not fund.
Consider an owner of a dental practice with a decade of steady deposits and strong personal credit. A bank may extend a line sized to the practice. The owner can use that line for a down payment on a flip and for surprise rehab costs, while a flip lender funds the main purchase and rehab. That pairing gives each product a clear job.
The trade-offs are just as clear. A line is sized to the company, not the deal, so it may be too small or too restrictive. Proceeds may be limited to the operating company’s business purposes, depending on the lender’s terms. Personal guarantees are common, so a stalled flip can reach your personal credit. A lender can also reduce or freeze a line if the company’s financials change. Nothing in a line enforces a budget, so overruns are easy to miss.
Can an SBA Line Fund a Flip?
Usually not. The SBA’s CAPLines family covers seasonal, contract, builders, and working capital needs. Working capital lines draw on existing assets and are not designed for property purchases. The Builders CAPLine is the narrow exception. It finances small general contractors who construct or rehabilitate property for resale, and “rehabilitate” means on-site work to the structure, utility connections, and landscaping.
The SBA’s operating manual, SOP 50 10 8, says building homes for future sale is ineligible except under Builders CAPLines. It also says construction of homes for future sale with no sales contract is not an eligible use for revolving facilities. That link is a third-party mirror of the manual, so check the SBA’s own page for the current text. For an investor flipping houses, the SBA route is generally not a fit.
How Each Product Treats a Business Owner
Business owners ask four questions most often.
Does operating-company revenue help? It helps a line a lot. A line underwriter reads those deposits as repayment capacity. A flip lender cares less, though it may count your liquidity and experience.
Does existing business debt matter? For a line, yes. Other debts on the company’s financials affect how much the lender will extend. For a flip loan, the lender focuses on the project and your guarantor profile.
Does cash inside the company count as liquidity? It can, depending on the lender. Many flip lenders want to see that you can bring your share of project cost, and they will ask where that cash sits.
Should the flip sit in the operating company? Often it should not. A separate entity keeps flip debt apart from working capital and from covenants on your other credit. Entity vesting is common on both products, subject to program terms.
Using Both on One Deal
The two products can share a deal. A flip loan funds most of the purchase and the rehab draws. A line, if you already hold one, covers the gap: the portion of project cost the flip loan does not fund, a surprise repair, or carrying costs.
Sequencing matters. Draw on the line for cash to close, then let the flip lender fund rehab in draws. The flip lender will want to know where your cash came from. Disclose a borrowed down payment up front, because lenders review liquidity sources and a surprise on the file can slow things down. Some lenders do not allow borrowed funds for the equity contribution, so ask before you commit.
What Goes Wrong When a Flip Runs Long
A stalled flip tests each product differently.
On a flip loan, the clock is the term. The loan runs 6 to 18 months interest-only, so a long rehab or slow sale means you need an exit. Many investors refinance out of hard money into long-term rental financing once the property is stabilized. Lendmire brokers that path through a DSCR loan, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
On a line, there is no fixed maturity clock, but the lender can review, reduce, or freeze the limit. The balance sits on your credit and your business financials while the property sits unsold. If the flip becomes a rental, the line balance may also matter when a later program reviews your overall picture. How much depends on the lender’s guidelines.
If you plan to keep reserves ready for a stall, Lendmire’s article Cash vs. Retirement Accounts vs. a Credit Line as Hard Money Reserves covers that choice.
Which One Fits? A Short Decision Guide
| Your situation | Likely lean |
|---|---|
| Strong deal, thin operating history | Flip loan |
| Strong company, uncertain rehab cost | Line of credit |
| One flip, want debt kept separate | Flip loan |
| Many flips in a row, steady deposits | Line, plus flip loans |
| Planning to hold as a rental | Flip loan, then DSCR refinance |
| Cash gap on a funded deal | Line as gap fill |
The Balanced Verdict
Neither product wins every time. A hard money flip loan wins when the project is the story. It brings draw discipline, a deal-sized loan, and a clean exit. A business line wins when the company is the story. It brings reusable, flexible cash, though it ties the flip to your credit and your business.
For most business owners who flip, the practical answer is to use the flip loan for the property and treat a line as the gap filler. If you only have time to compare one thing, compare what each lender underwrites. That tells you which door opens for you.
Many investors who plan to hold the property also read the complete DSCR loans guide to see how the refinance side works. Clearing a DSCR threshold is not the same as positive cash flow, since repairs, vacancy, and management sit outside that calculation.
Frequently Asked Questions
Is a line of credit better than hard money for flipping?
It depends on what you bring to the file. A line is better when your business is established and your costs are uncertain. Hard money is better when the deal is strong and your operating history is thin or irregular. Neither is better for everyone.
Can I use a business line of credit to buy an investment property?
Sometimes, depending on the lender’s terms. Some lines restrict proceeds to the operating company’s business purposes, and SBA working capital lines are not designed for property purchases. Read the commitment letter, and ask whether purchase use is allowed before you draw.
Does hard money ignore my credit?
No. Underwriting is asset-based, meaning property, plan, and exit, but credit and experience still matter. In the network, a 620 minimum score applies with extra conditions below 660, and experience sets your leverage tier. All of it varies by lender, property, and experience.
Do I need an LLC for a flip loan?
Many flip lenders prefer or require entity vesting, subject to program terms. An LLC also keeps the flip debt apart from your operating company. Ask the lender what its program allows before you form the entity.
Can the two products work together on one flip?
Yes. A flip loan can fund the purchase and rehab draws, while a line covers cash to close or an overrun. Disclose the source of your cash up front, because lenders review where your equity contribution came from.
Next Step
If you are buying, rehabbing, or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. Program details vary by lender, property, and experience, and nothing here is a commitment to lend.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. SBA – Lender resources / CAPLines
2. SBA SOP 50 10 8 (third-party mirror)
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a Business Owner Qualify for a Larger Hard Money Flip Loan? · Can You Buy a Flip in an LLC With a Hard Money Loan? · Can You Roll Closing Costs Into Hard Money on a Flip?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.