During recent years, it has become increasingly more difficult for some borrowers to qualify for a mortgage in the real estate market. However, for small business owners, there may be even more challenges standing in the way, The Wall Street Journal reports.
According to the newspaper, since many lenders have taken on stricter lending standards in the wake of the housing bubble burst, more financial documents are required from prospective borrowers to secure loans.
For small business owners, this could pose as a significant obstacle in the way to homeownership, since their can be inconsistencies with there income stream.
"You have almost a perfect storm, in the sense that tougher underwriting guidelines resulting from the housing bust are coming around the same time that a lot of business owners have posted their worst years on record," Bankrate.com senior financial analyst Greg McBride told the Journal.
In order to better gauge a small business owner's income, some lenders will take a two-year average. However, if the most recent year's income is notably less than the previous, they may elect to only consider the lower of the two.