Advantages of Using Retirement Savings To Fund Your Small Business

retirement savings


While many entrepreneurs are flocking to alternative lenders, such as LendingClub and OnDeck, to fund their business, others are using their 401(k) or IRA – without paying taxes or penalties. There are a number of advantages to using retirement money over taking out a loan, including:

  • No debt, no interest, your business is an equity investment
  • Faster access, get funding in about 10-15 days
  • Independence from investors, retain 100% ownership

The IRS refers to this financing strategy as “Rollovers as Business Start-Ups” ROBS.

“A growing number of entrepreneurs are using money from their 401(k), IRA or other retirement savings accounts to finance a new or existing business without paying taxes or penalties. The strategy has several key advantages.”

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