According to a recent article by Business Journal, the White House says sequestration would reduce SBA lending by $540 million. The current congressional sequestration process could scale back the Small Business Administration’s budget and force the SBA to decline loans to 1,1000 applicants. Furthermore, loan guarantees would be reduced by $902 million, and force cuts to counseling programs which would compel the agency’s partners to turn away at least 33,000 business owners seeking assistance. In large part because bank lending has not returned to where it was before the financial crisis, the SBA loan programs have grown in popularity, with the SBA approving nearly $1 billion more in loans from the previous year. The SBA predicts that it could run out of money for SBA loans in August or September.
ROBS 401k– the alternative to SBA LOANS
Many entrepreneurs and small business owners have come to rely on SBA loans and other SBA programs to start their business. This type of ambiguity might cause them to delay starting their business or give up on their plans all together. However, there is an alternative funding strategy that you should consider. The Rollover For Business Startups or ROBS transaction allows you to tap your 401K retirement funds to start or buy your business without interest or penalties, with no required loan payments or need to pledge collateral, and without having to find other investors or “backers”. Moreover, there is no credit check required. Furthermore, with a traditional loan, you would be required to make regular payments (including interest) to pay back a small business loan. These payments are not required when you roll over your 401k or other retirement funds into your business.
Visit 401k small business financing to learn more about using your retirement funds to finance your business or franchise, or call us at 1-800-489-7571.