Because small business owners may rely heavily on the value of their homes to finance their businesses (through mortgages or home equity lines), the fall in housing prices might be one of the causes of their difficulty. We analyze information from a variety of sources and find that homes do constitute an important source of capital for small business owners and that the impact of the recent decline in housing prices is significant enough to be a real constraint on small business finances.
Figure 1. Percent of Households with Home Equity Debt
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There are other ways to finance small business other than borrowing money and making your house as collateral. All you need to do is search and learn how it works. There are tie-ups which you can make other company as your partner in a certain project and there is also receivable financing which can protect your share and interest and increase your working capital. In business world, you can’t just stick to plan A there should always be, B, C and D.
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