Could the sub prime debacle bleed into the overall economy - and take your small business along with it?

Probably not -- but a little education can go a long way in preparing for any negative impact that the collapsing real estate market may have on your business.

First some fresh facts. The Wall Street Journal reports that the Securities and Exchange Commission's enforcement division is investigating whether any securities regulations were broken in connection with recent problems in the sub prime mortgage industry.

Wall Street analysts point to New Century Financial Corp., an Irvine, Calif.-based home lender that recently cut off funding to bank lenders, as the first and primary stop by federal regulators looking into the sub prime mess. The Journal reports that the SEC is probing the events leading up to its announcement that it would restate financial results for the first three quarters of last year.

Congress is also getting into the act. Senate Banking Committee Chairman Christopher Dodd, D.-Conn., has invited the chief executives of New Century and four other sub prime lending companies to testify before his committee this week.

Why all the hoopla? For starters, the growing number of delinquencies and foreclosures means a skidding stop to the once-roaring real estate market. According to a recent report from First American CoreLogic Americans borrowed $2.2 trillion from 2004 through 2006 in the form of adjustable loans, which start with low monthly payments that reset to higher rates. As those loans reset, 1.11 million people will lose their homes.

Analysts say that as home prices appreciated quickly, home buyers swarmed to lenders offering option-heavy adjustable-rate loans that made it simpler for borrowers to buy more expensive homes. But a declining real estate market means that buyers who took out the loans as the housing explosion was coming to an end made little or no money off their investments. According to the CoreLogic report, it's those borrowers who are most likely to wind up in default because they won't be able refinance or sell their homes at profit to cope with higher monthly payments.

"This isn't just sub prime," Christopher Thornberg, an economist with the consulting firm Beacon Economics in Los Angeles, told The Associated Press. "This problem is starting to occur in most of the adjustable- rate mortgages. Even for prime borrowers, we're seeing a big spike in delinquencies among adjustable-rate mortgages."

Small business owners who own adjustable-rate mortgages have limited options. You can try and refinance to a lower fixed rate, but check first for any language in your mortgage contract that says you can or cannot refinance over a specific period of time. For example, some  option-arm deals prevent you from refinancing for one, two, or even three years. If you see your mortgage rate skyrocketing, that’s your best option. If you can manage to swing the payments for a year, even as they rise, chances are the real estate market bust will peter out and prices will go back up again.

No matter what, the sub prime debacle is bad news for millions of homeowners, and by extension, the businesses they buy from. Common sense tells us that if cash-strapped Americans have less money to spend, it's the small business guy who gets hit first -- and hardest.