Home Equity Funded My Business -- Now What?

Steve Strauss wrote the bible on small biz. Literally. In addition to authoring The Small Business Bible, he runs MrAllBiz.com and is a featured columnist for USA Today. He's been studying, writing and speaking about how to grow a successful small business all his life, so email him with whatever leaves you stumped.

Q: I have a tough one for you! For years I have used my home equity to grow my small business. Whenever we needed money -- for whatever reason -- I would refinance. But now, with the mortgage crisis, doing so suddenly is a lot harder. What am I to do?

-- Larry, Photographer, New York

A: Is that your best shot?

So let's see, what we have here is a small-business person whose seemingly ever-growing home equity became his business safety net, or better put, his real estate ATM. He is not alone: Millions of entrepreneurs have done the same thing.

But now, because of the subprime crisis, banks will make continuing to do so more difficult. I mean, even Bank of America(BAC Quote), probably the largest small business bank in the country, recently decided to lay off 700 workers, stop offering home mortgages through brokers and bring the operation in-house.

So what do you do if the home-equity spigot has been turned off? Fear not, options still abound:

1. Credit cards: There are two kinds of debt: Good and bad. Good debt is reasonable, manageable and helps you improve your life. A mortgage is usually a good debt. Student loans can be a good debt.

Bad debt? We all know what bad debt is, eh? It's that trip you took to Bermuda on that nearly maxed-out high-interest credit card.

Using your credit cards to fund your entrepreneurial dreams can be a perfectly fine debt, as long as you can handle it and have a plan to pay it back in a reasonable amount of time.