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Posted on June 8, 2022 6 minute read

Options To Finance Home Office Projects


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Six financing options for your home office
How to finance home office projects

The Bureau of Labor Statistics recently found that almost 33% of businesses in the U.S. last year increased remote work. That’s almost a third of the country.

Since so many Americans choose to work from home, they’re also looking at their home office workspace options. And in many cases, home workers find these options can be less than ideal.

Remote workers want to create their best home office space. Often either by renovating their current home or through a new home purchase with better home office options.

Six financing options for your home office

We’re going to look at six ways to find financing to create your ideal home office space where you currently reside to make your small business or career skyrocket.

1. Cash-out refinance

One of the most effective ways to finance an extensive home office remodeling is to leverage your real estate by refinancing your mortgage for cash.

With cash-out refinance, you can arrange for a new mortgage for a higher amount than what you owe on your current mortgage loan. Once accepted, you receive cash in a lump sum, minus closing costs (about two to five percent of the loan amount). 

The cash amount is the difference between your home’s value and how much you have left to pay on your current mortgage. 

Compared to many other types of loans or business financings—like credit cards or business credit cards—cash-out refinancing tends to have lower interest rates. Most mortgage lenders allow you to access a maximum of eighty percent of your home’s value.

2. Home equity loan or home equity line of credit

Two similar financing options are home equity loans (HEL) or a home equity line of credit (HELOC). 

Homeowners can use either of these options to leverage their home’s value for access to cash. In both cases, you can use the cash for a variety of business expenses, and no business collateral is needed.

You’ll need a strong credit history to be accepted for these options. Both also tend to have lower interest rates but will likely have a long repayment term. 

In addition, HELOCs have more cash flexibility because you will only withdraw what you need for the business expenses. On the negative side, HELOCs usually have adjustable interest rates, meaning your monthly payments may be inconsistent.

With a home equity loan, you get a lump sum of cash but a fixed rate, enabling a more consistent repayment schedule. Plus, whatever interest you pay is also tax-deductible.

While these loan programs are generally less expensive than other options, it’s essential to remember that they are financially tied to the value of your home. If you’re unable to pay off the loan amount fully, your house is at risk.

3. Your employer

For decades, business owners have known that an efficient workspace leads to higher production. Your employer could easily be the best source for getting assistance in setting up your home office properly. 

Once the pandemic began, many employers encouraged their workers to switch to remote work environments. However, employers wanted to make sure uninterrupted work could continue. Many companies began programs to reimburse remote employees for their home office expenses.

In addition, your employer could be open to many home office upgrades like furnishings, computer hardware, or internet service improvements.

Talk to your employer and have a budget in mind, plus a game plan. Then, see what the options are.

4. Personal loan

Personal loans can be a good business plan for remodeling your office—depending on your goals. 

For example, if your home office renovation will be a small to mid-sized project, then a smaller personal loan might do the trick.

A key benefit of a personal loan is not connecting the loan application to your home. 

Personal loan interest rates can be on the high side, especially for those with a poor credit history or personal credit score. But those with an excellent credit score might be able to negotiate a rate of as little as three percent. 

A personal loan is also a good way to build your credit if you currently don’t have much or have a poor score. 

As with any loan product, always check over the loan terms carefully.

5. Credit cards

Credit cards can be a low-cost borrowing option—so long as you play your cards right.

Many credit card companies offer zero-percent introductory rates for new customers, translating into a possibly low-to-no interest rate option to pay for your home office upgrades. 

In addition, credit cards with cash-back perks or reward points are handy for purchasing office supplies or electronics. Some credit companies offer as much as five percent cash back on electronic purchases.

However, the standard interest rates of credit cards can be overwhelming. If you can’t pay off the balance in full at the end of each billing cycle, your debt will climb very quickly.

6. Small Business Administration loan (SBA loan)

Small business owners and self-employed workers can apply for a small business loan from the SBA. The U.S. Small Business Administration can assist owners and freelancers get funding for a variety of for-profit business expenses, including home office renovations.

On a bigger scale, SBA loans through their 7(a) program offer up to $5 million to small businesses that meet eligibility. These type of loans can be employed for things like renovation, expansion, or new construction.

On a smaller scale, the SBA Microloan option can get small businesses up to $50,000 for business expenses like supplies and office furniture.

The downside of this option is the time factor—the process is not quick if you need your money right away.

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How to finance home office projects

Navigating your personal finances and your home office projects can sometimes seem like a second full-time job—in addition to the one you’re already doing from home.

We could all use some professional clarity now and then—especially if you want to create a better work environment for yourself or help your small business get a sorely needed financial boost.

Contact a Homfinity loan officer today to explore refinancing options in greater detail or see what funds you might receive for business purposes. 

Starting a conversation won’t cost you anything, and it could be the way to make your home office the workspace of your dreams.

Photo by Surface on Unsplash