How? Thousands of small business owners and entrepreneurs who counted on mortgage financing now suddenly see that capital source drying up.
Mortgage-based business financing is a common strategy: A Discover Small Business Watch survey in August reported that 30% of small companies use home-based loans for funding.
The crunch is leading many small businesses to put their expansion plans on hold, experts say, and it’s also leading some small business proponents to call for new solutions to threatened financing sources.
One example: The Small Business Majority, a California-based national small business advocacy association, promotes forming a kind of government-supported, venture-investing system that would provide funding based on the viability of a new or young business—similar to the micro-lending programs used in developing nations. Visit www.smallbusinessmajority.com for more on the concept and other access to capital issues.