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The owner borrowed nearly $1 million from the business, using company money to buy a boat, several cars and a home outside the United States.
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MR. BERNSTEIN: We saw that in what I call the bubble markets — Phoenix, Las Vegas, Southern California, Florida — a lot of small-business owners borrowed against their house to do whatever.
The whole sector is teetering on the brink as a result and Four Seasons will not be the last private sector operator to end up struggling after the owners borrowed heavily to buy in.
Medallions now sell for a fraction of the record $1.3 million price in 2014, and in many cases, are worth far less than what their owners borrowed to buy them.
Yet the theater owners borrowed and built new houses, incurring huge interest-rate charges in the process, as if the theaters were full.
This may include money that owners borrowed against their foreclosure homes that they never paid back.
As house prices have risen, many countries, including America and Britain, have seen record levels of mortgage-equity withdrawal, as owners borrow more against the rising value of their property.
The city would adopt an increasingly popular program in which homes undergo an energy audit and their owners borrow money from the government to make them more efficient.
Rising rates increase borrowing costs, sapping returns for property owners and constraining owners' borrowing capacity.
Studies by Fairlie and Robb ([2007]) & Aldrich et al. ([1998]) found that a very low number of business owners borrow capital from their family.
Online lending is also democratizing the way consumers and small business owners borrow money, which means that they are less dependent on banks.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com