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Now, just as many consumers can no longer use their homes as cash machines, many small businesses can't draw on their properties to invest and hire. In a 2008 survey, 22% of small employers told the federation that they had taken out at least one mortgage to support their business operations.

"In olden days, many of the start-ups got financing by refinancing their homes. That's gone," said Sung Won Sohn, a California State University economist.

Sohn recalled a small auto dealer in Los Angeles who made most of his money not by selling cars but by frequently refinancing the mortgage on his lot, which until recently kept rising in value.
-LAT