Small business can’t get home loans

There are many reasons to avoid starting your own small business.

I have jokingly suggested that any intelligent person considering their life choices should give greater priority to becoming a government bureaucrat and looking forward to a prosperous life and an even more prosperous retirement.

I have also made it clear that starting a small business is extremely difficult, extremely frustrating and highly likely to fail.

If that is not sufficient to avoid starting a business consider the fact that the small business person will find it almost impossible to get a mortgage loan. Small business people file taxes based on a schedule C which is real income but it does not seem that way to lenders. Small business people get very large tax breaks but the barrier to mortgage loans is serious. A schedule C makes it look like there is no real income left after expenses to the ordinary lender.

I do think that a separate form of insurance for loans to small business people for mortgages may be warranted. If their business works they are highly reliable.

During the boom in real estate small business people were able to get mortgages because the aggressive mortgage loan brokers stopped looking at the income of the borrowers and only looked at the rising home prices.

Until we reach that stage again, we will need some mechanism for insuring loans for small business people.