Advantages of Using Retirement Savings To Fund Your Small Business

retirement savings

Source: www.csmonitor.com

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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