A commercial equity line of credit (CELOC) is a revolving line of credit that a borrower can use at any time during a specific, pre-determined period. During this period, which often lasts between 5-10 years, a borrower can take as much or as little money out as they would like, up to their credit limit. They will then need to repay the loan over a set repayment period. CELOCs are often best for borrowers who aren’t sure how much equity they want to take out, but want ready access to capital when they need it.

Commercial equity lines of credit, also known as CELOCs, involve a commercial real estate owner being given a line of credit that allows them to borrower against the equity in their property. Commercial equity lines of credit can be used for a variety of purposes, including growing your business by hiring new employees, obtaining new inventory, financing property improvements, or even purchasing a new piece of real estate. CELOCs are much like the home equity lines of credit (HELOCs) found in residential real estate.

The benefits of a commercial equity line of credit include access to capital when needed, the ability to borrow as much or as little money as needed, and the ability to use the loan for a variety of purposes, such as growing your business, obtaining new inventory, financing property improvements, or purchasing a new piece of real estate. Commercial Equity Loans: The Basics and Commercial Equity Lines of Credit in Commercial Real Estate.

In general, commercial equity lines of credit permit LTVs up to 70-75%. However, this depends on a variety of factors, including the credit score and financial strength of the borrower, and how much debt they currently have on the property.

Unlike a commercial equity loan, which offers borrowers a one-time, lump sum amount, commercial equity lines of credit offer borrowers a revolving line of credit that they can use at any time during a specific, pre-determined period. During this period, which often lasts between 5-10 years, a borrower can take as much or as little money out as they would like, up to their credit limit. They will then need to repay the loan over a set repayment period.

To obtain a commercial equity line of credit, borrowers must meet certain requirements, including having a good credit score and financial strength, and not having too much debt on the property.

The risks associated with a commercial equity line of credit include the potential for default if the borrower is unable to make payments, as well as the potential for the lender to call the loan due if the borrower fails to meet the terms of the loan. Additionally, the borrower may be subject to higher interest rates and fees than with a traditional commercial equity loan.

For more information, please see Commercial Equity Loans: The Basics and Commercial Equity Lines of Credit in Commercial Real Estate.

Commercial equity lines of credit, also known as CELOCs, involve a commercial real estate owner being given a line of credit that allows them to borrower against the equity in their property. CELOCs are much like the home equity lines of credit (HELOCs) found in residential real estate. CELOCs are often best for borrowers who aren’t sure how much equity they want to take out, but want ready access to capital when they need it.

The terms of a CELOC can vary depending on the lender, but generally, they offer a wide variety of term options and up to 75% loan-to-value (LTV). The repayment period is usually set for 5-10 years, and borrowers can take out as much or as little money as they need, up to their credit limit.