The Value Of Homes Is Affecting The Funding For Small Businesses

In the past few years many small business owners were avoiding small business loans

and instead using their home equity line of credit in order to fund their small businesses. However, with the dropping house prices, that is no longer the easy way out. Often, small businesses owners like to utilize home equity lines of credit because of their liquidity, however, due to the recent economic hardships, banks are freezing those lines. Many times they are freezing these lines without much or without any notice to the business owner.

Stories of homeowners relying on their home equity line for daily operations are not uncommon. Small business owners are using any and all means to cut down on costs, even if it means not paying themselves for the time being. Its an unfortunate reality that this situation is not unique to one or two small business owners.

As said earlier, the liquidity of home equity loans is what draws people in. However, another reason owners tap this cash is because they dont have to submit detailed business plans, as when applying for a small business loan. With easier access to money they can get a quicker means to growth. However, the problem is that many small business owners dont make wise decisions regarding their money and the scrutiny received by small business lenders may be just what those businesses need to see their weaknesses, if there is any in their business plans.

The fact of the matter is that it is a difficult time for small business owners. While even large companies are struggling, it is an even more grueling battle for those small businesses owners serving a niche market. When people cut back on daily living expenses they are going to find themselves visiting the large retail outlets rather than the small specialty stores. While even I would like to help the small business owners in our neighborhood survive or the little coffee stands that are on each corner I cant help but want to save the money. When trying to maximize every penny, I choose to go to the place that will accept my coupons, having the best sales or offering the best deals. Who can blame the average consumer for cutting back?

Small businesses loans are going to be difficult to get now and drawing on a home equity line even more improbable. Those struggling small businesses are going to have to consider hard what they can do to survive and if they can survive. While there may be some ways that they can cut back in life or perhaps scale back on their employees or overhead, after awhile there is only going to be so much that can be done. With realistic expectations, a solid financial plan and a strong business mindset, small businesses owners can withstand the tumultuous economy. While evidence seems to suggest we will find ourselves pulling out of this soon, it may still be a slow road.

Are you sick of reading articles and watching news stories regarding the stupid economy? Yes, I know. But, the fact of the matter it is affects us all everyday. We may find ourselves making choices we would never have made before, cutting back on things we thought we could not live without. Lets face it we can all do our part and we will survive hopefully we can bring those small business owners with us.

by: Jason Ausmus

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