Business HELOC rates: what to expect and what drives your price

A business-purpose HELOC carries a variable rate tied to the prime rate, which sat at 6.75% as of September 2026. Most lenders price the line at prime plus a margin of 0.25 to 3 percentage points, depending on your credit and equity. The national average HELOC rate across all lenders is 7.29%, according to Bankrate's September 2026 survey.

How business HELOC rates are actually set

Most people shopping for business financing are used to seeing fixed rates: a term loan at 11%, an SBA 7(a) at a stated APR. A HELOC works differently. The rate is variable, and it's composed of two pieces: a published index (the prime rate, set by the Fed and published by the Wall Street Journal) plus a lender margin.

When the Fed raises rates, your prime rate goes up, and so does your HELOC rate. When the Fed cuts, your rate drops. This is not fine print: it is the core mechanic, and it matters for how you plan. If you draw $200,000 on your HELOC when rates are at 7%, then rates rise two points, your interest cost on that draw rises too.

The Federal Reserve publishes the prime rate as part of its Selected Interest Rates release. (Federal Reserve H.15 Selected Interest Rates) As of September 2026, prime is 6.75%. That is your floor. The lender's margin is added on top, and that margin is what you actually control through your credit profile and equity position.

One option worth knowing: some programs let each new draw lock its own rate at the time of the draw. So if you draw $50,000 today at 7.5% and draw another $30,000 in six months, each draw carries its own rate for its life. That gives you some protection against rate movement without requiring you to take a fixed-rate loan from the start.

What actually determines your margin

The lender's margin is where you either save money or give it away. Here is what moves it in the real world:

Credit score. This is the single biggest lever. A borrower at 650 qualifies for the product but does not get the best margin. A borrower at 750 or above is in a position to get a materially lower margin from a competitive lender. The difference can be a full percentage point or more, which on a $300,000 line represents $3,000 per year in extra interest per point of APR.

Combined loan-to-value (CLTV). CLTV is the ratio of all your outstanding home debt (mortgage plus the new HELOC) to your home's value. Our program allows up to 85% CLTV. A borrower at 60% CLTV looks very different to a lender than a borrower at 83%, because there is far more equity cushion. Lenders reward that cushion with a lower margin. The more equity you are leaving behind, the better the pricing tends to be.

Property type. Primary residences get the best margins. Second homes and investment properties carry a higher margin because the lender's collateral is slightly riskier: if a borrower is in financial trouble, they are less likely to prioritize payments on an investment property than on the home where they sleep. Our credit requirements reflect this: 650 minimum on a primary, 680 on a second home or investment property.

Loan size. Very small draws (under $25,000 or so) sometimes carry a higher margin, since the fixed cost of origination is large relative to the interest income. Larger amounts in the $100,000 to $500,000 range tend to be priced more competitively. This varies by lender.

Bank-statement vs. tax-return income. Borrowers who qualify through bank statements (the path most self-employed owners take, since tax returns understate their real income) are not penalized with a higher rate for using that path. The underwriting is different, but the pricing follows the same credit and CLTV logic. We covered the full mechanics of how bank-statement HELOCs work for self-employed borrowers in a separate post.

How business HELOC rates compare to personal HELOC rates

Most of the top SERP results for "business HELOC rates" are actually personal HELOC rate tables. This creates a real comparison problem: a personal HELOC and a business-purpose HELOC are priced by similar mechanisms, but they are not identical products.

A personal HELOC is underwritten on your personal income and credit, with the home as collateral, and proceeds used for personal purposes. A business-purpose HELOC adds a business-use requirement and often uses bank-statement underwriting in place of tax returns. That extra underwriting complexity sometimes adds a small margin premium over a personal HELOC at the same credit and CLTV levels, but the difference is typically modest.

The useful comparison is not personal HELOC vs. business HELOC. It is business HELOC vs. the other options available to a business owner: lines of credit, term loans, SBA, and merchant cash advances. That is the comparison that actually determines whether the rate is good or bad for your situation.

Can an LLC get a HELOC?

Not in the way most people imagine. An LLC or corporation as an entity generally cannot take out a HELOC, because the line is secured by real property and most business-purpose HELOC programs require the borrower to be the property owner as an individual.

The way this works in practice: the business owner (as an individual) applies for the HELOC using their personal real estate as collateral. The proceeds are then deployed into the business, which is why it qualifies as a "business-purpose" HELOC rather than a consumer product. The business's revenue and bank statements still factor into the qualification. You need an active business bank account, and lenders look at your business cash flow alongside your personal credit and property equity.

This structure is the same reason that many CPAs and lenders flag business-purpose HELOC interest as generally not tax-deductible: the IRS considers the interest on equity lines that are not used to buy, build, or improve the secured property differently from mortgage interest. That is a question for your tax advisor. We mention it here because we think honest disclosure on tax treatment matters, and it is a point a lot of business HELOC content glosses over.

Why comparing a HELOC rate to MCA or short-term loan costs requires different math

This is where most business owners get confused, and it is worth spending some time on.

A merchant cash advance does not have an "interest rate" in the traditional sense. It uses a factor rate: an advance of $100,000 at a factor rate of 1.35 means you repay $135,000 regardless of how fast you pay it back. When converted to an annualized percentage rate based on a typical repayment schedule, the CFPB found that MCA products frequently carry effective APRs ranging from 40% to over 150%, depending on the term and factor rate. (CFPB: What is a merchant cash advance?)

A HELOC at prime plus a margin is priced in a completely different universe from an MCA at a 1.3 or 1.5 factor. The raw interest rate on a HELOC is a fraction of the effective cost of most short-term business financing. This is why comparing "the HELOC rate" to a term loan APR or to an MCA factor rate without converting everything to the same basis produces a misleading picture. Our line of credit vs. MCA cost comparison shows the math in more detail.

If you are currently carrying MCA debt and wondering whether the HELOC option is available to you, the decision point is usually your equity and your credit score. If those two numbers work, the cost difference is significant enough to be worth finding out. The program walkthrough covers exactly how we structure this for business owners with equity and gives you a clear picture of what you might qualify for.

How business HELOC rates compare to other financing

The table below shows the general rate structure for the main business financing options we see business owners comparing.

A few notes on this table. The SBA 7(a) rate is variable and tied to prime, just like a HELOC, but it adds the SBA's maximum allowable spread on top. A well-qualified HELOC borrower often lands below what the SBA charges on a variable-rate 7(a). The trade-off is that the HELOC requires equity and puts your home on the line; the SBA 7(a) can fund up to $5 million and does not necessarily require residential collateral.

For a deeper look at how the HELOC compares to the SBA and business loan options across cost, speed, and requirements, our HELOC vs. business loan breakdown covers the full picture.

When a variable HELOC rate is not the right fit

I want to be direct about this, because it is easy to read a rates post and assume lower is always better. A HELOC is the wrong tool in several situations, and rate is only part of the picture.

You need payment certainty. A variable rate means your monthly cost moves with the Fed. If you are drawing $400,000 for a major expansion and you need to know exactly what your monthly service cost is for the next three years, a fixed-rate term loan is a cleaner structure. You will likely pay more on the rate, but the predictability has real value in financial planning.

You are borrowing for a defined one-time use. A HELOC is a revolving line, which is its core advantage for recurring or unpredictable capital needs. If you are funding a single equipment purchase, a specific build-out, or a one-time acquisition, the revolving structure adds complexity you may not need. A term loan delivers a fixed amount at a fixed rate with a fixed schedule, which is often the cleaner fit for a discrete project.

You want to keep your home out of your business risk entirely. This is a legitimate preference and not a financial mistake. Some owners have worked hard to pay down their mortgage and feel strongly about separating home equity from business exposure. An unsecured business line of credit or term loan does not put your property on the line. We respect that boundary and do not push the HELOC at owners who are not comfortable with the trade-off.

For more on the full risk picture of using home equity for business capital, including the scenarios where we think it is a mistake, see our post on using home equity to fund your business responsibly.

What does a business HELOC payment actually look like?

During the draw period, you pay interest only on what you have drawn, not on your total credit limit. This is one of the mechanics that makes a HELOC efficient for business owners who do not always need the full line outstanding.

Here is the basic math. Using the Bankrate national average of 7.29% as a reference point:

• $50,000 drawn: approximately $304 per month in interest
• $100,000 drawn: approximately $607 per month in interest
• $250,000 drawn: approximately $1,519 per month in interest

As you repay principal, the interest cost drops proportionally. If you repay $50,000 of that $100,000 draw, your next month's interest is roughly half. And once you have repaid a draw, you can redraw up to 100% of the line during the draw period without reapplying. There are no prepayment penalties, so paying down the line aggressively costs you nothing extra.

At the end of the draw period, most programs move to a repayment phase where principal and interest are amortized. The length of the draw period and repayment term varies by lender and program. These mechanics are part of what we walk through in detail in the program overview, before you apply. Check the full HELOC qualification requirements to see what a lender looks at on your specific file.

See the HELOC program and find your rate range →   Read the full HELOC guide

Frequently asked questions

Can an LLC get a HELOC on a business property?
A business entity can sometimes get a commercial line of credit secured by commercial real estate, but that is a different product from a business-purpose HELOC. The business-purpose HELOC programs we work with require an individual borrower who owns residential real estate, with proceeds deployed into the business. The LLC structure does not disqualify you as a borrower; you apply as the individual owner of the property.

What is the monthly payment on a $50,000 HELOC?
During the draw period, you pay interest only on what you draw. At the Bankrate national average of 7.29% (September 2026), $50,000 drawn works out to roughly $304 per month in interest. If you draw less, you pay proportionally less. If you repay and redraw, the interest resets to whatever you have outstanding at the time. There is no payment on amounts you have not drawn.

How much would a $100,000 HELOC cost per month?
At 7.29% (Bankrate national average, September 2026), the interest-only payment on $100,000 drawn is approximately $607 per month. The actual rate on your specific HELOC will depend on your credit score, your CLTV, and the lender's margin. A well-qualified borrower with a strong credit score and significant equity typically lands below the national average; a borrower closer to the minimum thresholds typically pays a higher margin.

Do business HELOC rates change after you open the line?
Yes, on a standard variable-rate HELOC, your rate moves whenever the prime rate changes, which happens when the Federal Reserve adjusts the federal funds rate. If rates rise significantly, the cost of an outstanding draw rises with them. Programs that allow fixed-rate draws let you lock each individual draw at the rate on the day you make it, which limits your exposure to future rate increases on that specific draw amount. Ask your lender whether fixed-rate draws are available before you open the line.