Sunday, September 16, 2012

Real Estate andR Small Business Loans

According to an article posted in the American Express Open Forum, most small business loans are collateralized by real estate. To be more specific, most are backed by the owners' (or, in a few cases, the investors') primary residence. The second most common source is rental property owned by the entrepreneur or the office building (or warehouse or retail outlet) owned by either the company or the entrepreneur. Admittedly, I didn’t know the statistics on this, but in my years of advising small businesses and their owners, this has been my experience.
Per the article, “The Real Reason Small Businesses Struggle to Get Credit” by Courtney Rubin,  “Nearly all of the businesses surveyed own some sort of property, and the assets’ declining values cut small business’s clout with creditors.”
Read the entire article at http://www.cash4impact.com/business-credit/property-values-impact-small-business-loans/.
Businessman_holding_house
Many small business owners with little business collateral must use their homes as collateral.


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