Declining Home Values Hurting Small Businesses
Declining Home Values Hurting Small Businesses
Declining Home Values Hurting Small Businesses
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December 29 2010 (Jeff Alan)
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A recent study by the Federal Reserve helps to answer one of the reasons why small business creation has been lagging since the end of the recession. The study found that declining home values has limited the ability of homeowners to borrow against the equity of their property which has been an important source of capital in the past.

The Federal Reserve Bank of Cleveland noted that while tighter credit and reduced demand are often cited as reasons that small business lending has declined during the recession, falling property values are also a significant factor and one that could prove harder to overcome.

“The decline in home values has constrained the ability of small business owners to obtain the credit they need to finance their businesses.”

Small business owners reported last summer, that the reduced value of their homes made it difficult for them to obtain the capital needed to finance their business. According to one study cited, as many as one in four small business owners in 2007 either used their home as collateral for a business loan or took out a personal home equity loan to provide business capital.

The report found that households headed by small business owners used Home Equity Lines of Credit (HELOCs) more extensively than those headed by non-business owners. In addition, small business owners’ use of HELOCs increased more rapidly during the housing boom, suggesting they were tapping into more equity.

Certain types of businesses, particularly those in the real estate and construction industries, younger and smaller businesses, those with uncertain financial prospects and those in states where the increase in home values during the boom was highest appeared to more likely to borrow against their homes equity.

Although the more widely recognized business credit concerns may dominate the press, restoring home equity lending for the purpose starting a business or expanding a business presents significant challenges in today’s housing market.

“Returning small business owners to pre-recession levels of credit access will require an increase in home prices or a weaning of small business owners from the use of home equity as a source of financing. Neither of those alternatives falls into the category of easy and quick solutions.”

Tags: home values, federal reserve, recession, homeowner equity, tight credit, small business lending, falling home values, small business owners, heloc

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Helpful Tools
Mortgage
Calculator

Estimate your monthly mortgage payment
Auto Loan
Calculator

Determine how much car you can afford before buying
Learn About
Mortgage Loans

Learn about the different types of home loans
15 Year vs 30 Year
Loan Comparison

Compare 15 year and 30 year mortgage loans
Todays Mortgage
Rates

See today's mortgage rates. Shop, compare and save.

December 29 2010 (Jeff Alan)
money-house-image
A recent study by the Federal Reserve helps to answer one of the reasons why small business creation has been lagging since the end of the recession. The study found that declining home values has limited the ability of homeowners to borrow against the equity of their property which has been an important source of capital in the past.

The Federal Reserve Bank of Cleveland noted that while tighter credit and reduced demand are often cited as reasons that small business lending has declined during the recession, falling property values are also a significant factor and one that could prove harder to overcome.

“The decline in home values has constrained the ability of small business owners to obtain the credit they need to finance their businesses.”

Small business owners reported last summer, that the reduced value of their homes made it difficult for them to obtain the capital needed to finance their business. According to one study cited, as many as one in four small business owners in 2007 either used their home as collateral for a business loan or took out a personal home equity loan to provide business capital.

The report found that households headed by small business owners used Home Equity Lines of Credit (HELOCs) more extensively than those headed by non-business owners. In addition, small business owners’ use of HELOCs increased more rapidly during the housing boom, suggesting they were tapping into more equity.

Certain types of businesses, particularly those in the real estate and construction industries, younger and smaller businesses, those with uncertain financial prospects and those in states where the increase in home values during the boom was highest appeared to more likely to borrow against their homes equity.

Although the more widely recognized business credit concerns may dominate the press, restoring home equity lending for the purpose starting a business or expanding a business presents significant challenges in today’s housing market.

“Returning small business owners to pre-recession levels of credit access will require an increase in home prices or a weaning of small business owners from the use of home equity as a source of financing. Neither of those alternatives falls into the category of easy and quick solutions.”

Tags: home values, federal reserve, recession, homeowner equity, tight credit, small business lending, falling home values, small business owners, heloc

FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
HOW LOANRATENETWORK
LOAN CENTER WORKS
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.
Helpful Tools

December 29 2010 (Jeff Alan)
money-house-image
A recent study by the Federal Reserve helps to answer one of the reasons why small business creation has been lagging since the end of the recession. The study found that declining home values has limited the ability of homeowners to borrow against the equity of their property which has been an important source of capital in the past.

The Federal Reserve Bank of Cleveland noted that while tighter credit and reduced demand are often cited as reasons that small business lending has declined during the recession, falling property values are also a significant factor and one that could prove harder to overcome.

“The decline in home values has constrained the ability of small business owners to obtain the credit they need to finance their businesses.”

Small business owners reported last summer, that the reduced value of their homes made it difficult for them to obtain the capital needed to finance their business. According to one study cited, as many as one in four small business owners in 2007 either used their home as collateral for a business loan or took out a personal home equity loan to provide business capital.

The report found that households headed by small business owners used Home Equity Lines of Credit (HELOCs) more extensively than those headed by non-business owners. In addition, small business owners’ use of HELOCs increased more rapidly during the housing boom, suggesting they were tapping into more equity.

Certain types of businesses, particularly those in the real estate and construction industries, younger and smaller businesses, those with uncertain financial prospects and those in states where the increase in home values during the boom was highest appeared to more likely to borrow against their homes equity.

Although the more widely recognized business credit concerns may dominate the press, restoring home equity lending for the purpose starting a business or expanding a business presents significant challenges in today’s housing market.

“Returning small business owners to pre-recession levels of credit access will require an increase in home prices or a weaning of small business owners from the use of home equity as a source of financing. Neither of those alternatives falls into the category of easy and quick solutions.”

Tags: home values, federal reserve, recession, homeowner equity, tight credit, small business lending, falling home values, small business owners, heloc

HOW LOANRATENETWORK
LOAN CENTER WORKS
FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT
CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.