Home Equity Can Be a Great Resource For Your Small Business
A report released in early October, 2009 by CIBC discussed the strength of the Canadian small business sector.
The report shows that the small business sector has grown during the recession and experienced fewer job losses that large employers. Where companies with more than 100 employees cut 10% of their staff, small businesses saw a comparatively minor 1% jump in unemployment.
There are plenty of reasons for their success. For one, small businesses depend less on export markets and more on local consumers. If consumers feel confident enough to spend, small businesses benefit. Compared to the U.S., Canadian consumer confidence was very high throughout the economic downturn. A robust housing market, aided by historically low mortgage rates, was certainly a factor in Canadians’ positive outlook.
And even though unemployment in Canada jumped by 2.5% between August 2008 and 2009, people were out of work for an average of only 15 weeks -one week longer than the 14-week average experienced prior to the recession. Looking at the U.S., the duration jumped to a very high 25 weeks, compared to 18 weeks before the downturn occurred.
Why the stark difference here? The assumption by CIBC report author Benjamin Tal is that the “labour market is more dynamic” in Canada. In other words, people who lost their jobs turned to self-employment to make ends meet. Between 2008 and 2009, the number of self-employed in Canada rose by nearly 93,000.
Using Your Home Equity to Start a Business
When it comes to launching a small business, there are lots of associated costs. Depending on the type of business you plan to run, costs can run pretty high. If you intend to enter the retail market, you need to cover a lease, computers, inventory, and staff. Even small home-based businesses require an investment in some basic equipment: a computer, printer, desk, and office supplies. Then there are associated marketing costs. You may need to hire a marketing firm, take some courses, buy some books, purchase a Website domain, and create a website.
And that is just the beginning. Even with the best business plan, you will run into additional costs somewhere along the line.
A home equity line of credit (HELOC) is often the perfect solution for a small business. More affordable than standard loans, a HELOC also gives the added flexibility of quick and easy access to funds.
Even if you have an established business, you can use a HELOC to make an investment in your company to expand, try new markets or products, or add staff. With interest rates as low as they are now, home equity products are probably one of the most affordable ways to invest in your business.
If you decide a HELOC is the way to go, speak with a certified mortgage professional about negotiating the best terms for your specific needs.
Canadian Mortgages Inc is a mortgage broker in Toronto providing home equity loans, second mortgages and more.
Article Source: http://EzineArticles.com/?expert=Brian_B_King
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