When you take out a business loan using any asset you have as collateral in order to finance some business venture or to tide you over a phase of the low business, it is known as a business loan. Since these loans are secured, the interest rates on them are much lower and therefore make such financial support very useful for businesses without running up an unmanageable debt.

An equity loan is a top up on an already existing business loan and is calculated based on the percentage of your property that you own in relation to how much you still owe to the bank. When you apply for an equity loan, lenders are relatively more assured of your ability to repay the loan as the additional loan is secured by your house itself being the collateral.

Usually, an equity loan is taken out as an additional loan that is added to an existing loan and is calculated based on the value of the property which acts as a surety. Most home equity loans enjoy hundred percent tax exemption making them more viable than accumulating debt on your credit card. A home equity loan is also especially beneficial considering that it is a fixed interest loan, which offers some degree of financial protection at a time when normal interest rates on loans are subject to market fluctuations.

The difference between home equity loans and refinancing is that interest rates are likely to be lower with cash out refinancing than with an equity loan. However, when you go in for refinancing, you would be liable to pay closing costs which may sometime run into large sums of money.

The national average rate of interest on equity loans is in the neighborhood of 5.2 % for a US$30,000 fixed interest home equity loan, which is considerably lower than the rate of interest currently charged on credit card debt which ranges between 14% and 22% percent depending on the type of credit card.