Structure of Household Debt of Small Business Owners in the United States

This descriptive analysis examines the importance of personal financing sources, especially mortgages secured by residential property, to small businesses from 1998 through 2007. About 80 percent of the total debt owned by small business-owning house-holds is held in mortgages and installment loans. The likelihood of holding a residential mortgage increased from 64.7 percent in 1998 to over 73 percent in 2007, and the share of total debt held in residential mortgages increased from 67.3 percent in 1998 to 70.6 percent in 2007 for small business-owning households. After controlling for owner characteristics, small business-owning households did not hold a larger share of total debt in residen-tial mortgages than other households from 1998 through 2007. However, small business-owning households did hold a larger share of total debt in other loans secured by residential property and line of credit loans secured by residential property than other households. These loans comprise less than 18 percent of the value of total debt held by small business-owning households in 2007, suggesting that while financial intermingling does occur, it repre-sents a relatively small share of total debt.