SmallBusinessNewz

An interesting and somewhat disheartening study shows that over 2.1 million California small business jobs will be lost over the next 3 to 4 years. This is being significantly impacted by toxic home mortgages.

The study from Bornstein & Song, CPAs & Consultants Study with MerchantCircle, indicates that over a third of all California small business owners took out risky or toxic mortgages to get cash for business expenses from '04 to '07.

According to the study, "As the first wave of mortgage resets hit, small business owners will be at-risk of 'payment shock' and default as their monthly mortgage payments skyrocket. The toxic mortgage resets began in the 4th Quarter 2008 and will continue through 2012."

Highlights from the survey include:

- 34.9 % (1,173,900* At-Risk) CA Small Business Owners used risky or Toxic Mortgages or refinancing to get cash for business expenses. These mortgages are at-risk of default at reset.

- 29.9 % (1,005,700* At-Risk) CA Small Business Owners are "very worried" about their monthly mortgage payment due at reset. They are at-risk of "Payment Shock."

Estimated Job Loss for CA Small Business Owners Who are "Very Worried"(2009 to 2012)

- Low 2,100,500
- High 3,272,300+

- 28.7 % (965,300* At-Risk) CA Small Business Owners are At-Risk of "Payment Shock". They do not know the monthly mortgage payment that they will be required to pay at reset.

- 17.9 % (602,100* are at Immediate Risk of Default) CA Small Business Owners are delinquent, having missed 1 to 3 or more monthly mortgage payments at this date. More delinquencies are expected in the upcoming resets in 2009 to 2012.

Estimated Job Loss for CA Small Business Owners Who are Now Delinquent

- Low 1,461,400
- High 2,582,500+

* Based upon 3,363,476 CA Small Business Owners, according to 2007 report prepared for the Small Business Administration's office of Advocacy.