Best Small Business Start-Up Loan Alternative – Rollover as Business Startup (ROBS)

A recent article in the New York Times (“The State of Small-Business Lending”)   paints a bleak picture for those hoping to start a business in 2013. Stating that without an existing business, stellar credit and a stable cash flow, the likelihood of obtaining a traditional bank loan is essentially a long shot: “If you’re trying to start a business today, you can almost forget about going to a bank for financing.” While the Small Business Administration does offer loans for new franchises, the franchise must be on the list of their “pre-approved” franchises. While this presents an opportunity, for most, the decision to start a specific franchise is due to location, working capital, andhighly influenced by franchise rules and regulations.

To fill the need in the small business lending market an“alternative financing industry”  comprised of investment banks and Silicon Valley venture capital firms has stepped in to offer loans to small business owners. With savvy technology and a quick turnaround time, these alternative investors are attracting many entrepreneurs frustrated with traditional banks willing to pay their high fees, to achieve their dreams.  According to the article there is a “wide discrepancy in pricing between bank loans and alternative loans.”   The author states that self-starters need to “find new ways to get lower priced capital”.

One sure way, and something the article fails to mention, is a Rollovers as Business Start-Ups (ROBS)financing transaction, in which prospective business owners use their 401k retirement funds to pay for new business start-up costs.  A ROBS transaction allows you to invest your 401k in non-traditional investments such as: existing businesses, new business start-ups, franchises, non-franchises, real estate, and non-traditional investments without incurring distribution taxes or penalties.In a ROBS transaction, the entrepreneur or franchise owner launches his/her new business through a cash investment by their retirement plan and thus the new business is not responsible for monthly payments which accompany interest-bearing small business loans. In addition, the turnaround time to complete a ROBS transaction is significantly less than traditional bank and S.B.A. loans so that self-starters can be on their way achieving their dreams of business ownership much faster.  With not much expected to change in 2013 with regard to traditional small business lending, the ROBS transaction may provide many entrepreneurs with the working capital they need to start their business.

Learn more at our ROBS Business Financing page!

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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