Jonathan McNair, Partner at Baker Tilly WM LLP, penned an article for Small Business BC titled "Financing Your Small Business Venture." A brief excerpt below:
"Many British Columbia small business owners are also home owners. In recent years, BC’s rapidly increasing real estate values have enabled many small business owners to look to their homes as a ready source of cash or security to finance their business ventures. This may be a risky strategy, but for many brave small business owners, it is the only real option available to get their business started.
Understanding the Risks
Practically speaking however, whether you are drawing from an established homeowner’s equity line of credit (“HELOC”) to personally fund your business venture or seeking direct financing for your business entity from a bank or other third-party lender, there is a similar amount of risk involved. In the former scenario the money has been borrowed in your personal capacity, while in the latter scenario the lenders will usually require that the borrower provide a personal guarantee in support of the loan to their small business entity. In either case, if your only significant asset is your home, then you’re putting it at risk..."
Click here to read the full article on Small Business BC's website.