Small Business Owners Turn to Personal Credit
This article examines the forbearance take-up rate in small business owners. Although the Coronavirus Aid, Relief, and Economic Security (CARES) Act provisions were intended to target households, they also provided relief for troubled small business owners through the personal credit channel. Small business owners were more likely to enter forbearance on their personal mortgage, a difference especially pronounced in harder hit industries. Business owners were also more likely to borrow against their home equity during the first phase of the pandemic. These coping strategies have likely helped businesses preserve cash flow and avoid delinquency and bankruptcy for their business and themselves personally.