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The effect of falling home prices on small business borrowing

Author

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  • Mark E. Schweitzer
  • Scott Shane

Abstract

Small businesses continue to report problems in obtaining the financing they need. 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.

Suggested Citation

  • Mark E. Schweitzer & Scott Shane, 2010. "The effect of falling home prices on small business borrowing," Economic Commentary, Federal Reserve Bank of Cleveland, issue Dec.
    • Handle: RePEc:fip:fedcec:y:2010:i:dec20:n:2010-18
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    Citations

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    Cited by:

    1. Bryon Higgins, 1986. "Debt, financial stability, and public policy (Symposium overview)," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 1-14.
    2. Kapinos, Pavel & Gurley-Calvez, Tami & Kapinos, Kandice, 2016. "(Un)expected housing price changes: Identifying the drivers of small business finance," Journal of Economics and Business, Elsevier, vol. 84(C), pages 79-94.
    3. Jon Christensson & Jim Wilkinson, 2011. "Can the supply of small business loans be increased?," Economic Review, Federal Reserve Bank of Kansas City, vol. 96(Q II).

    More about this item

    Keywords

    small business finance; Housing - Prices;

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