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Small Business Owners Turn to Personal Credit

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Abstract

In our first post in this series we showed that mortgage provisions under the CARES ACT and its subsequent extensions resulted in a rapid take-up of mortgage forbearances, under which borrowers had the option to pause or reduce debt service payments without inducing a delinquency notation on their credit reports. Here we examine the forbearance take-up rate of a group of mortgage borrowers we expect to have been particularly hard hit by the pandemic recession: small business owners. Relatively little is known about how small business owners have fared over the past year in terms of their personal finances. Were they able to continue making mortgage payments on their homes? Did they draw on home equity to help fund their business operations?

Suggested Citation

  • Andrew F. Haughwout & Donghoon Lee & Joelle Scally & Wilbert Van der Klaauw, 2021. "Small Business Owners Turn to Personal Credit," Liberty Street Economics 20210519c, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:91820
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    More about this item

    Keywords

    small business; household finance; CCP; Consumer Credit Panel;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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