Rollover As Business Startup (ROBS) Is A Less Costly Alternative To Revenue-Based Financing (Factoring)
by Mark Nolan on 02/22/13
The financial crisis in 2008 has created a large hole in small business financing. Banks simply don’t want to lend to businesses or entrepreneurs that don’t have stellar credit, a stable cash flow, and those without substantial revenue. Needless to say the current state of small-business lending appears bleak. As a result of this lending shortfall, alternative lending sources have emerged to meet the increasing demand. One alternative for small businesses is known as Revenue-based financing (Factoring). Borrowers of this type of loan promise a share of their future revenue until their debt is paid. Attractive to potential borrowers of this type of loan is 1) how quickly they are approved for and receive the loan (within a few weeks) and 2) if no revenue is made in a particular month the business doesn’t have to make a payment. However, this loan comes with a hefty interest rate between 18 and 30 percent and companies with slow growth and thin gross margins, need not apply.
Therefore, where do business owners without an established revenue model as well as self-starters looking to start their own business or buy a franchise look for funding? What if there was a way to acquire the small business financing you need without paying interest rates and is penalty free? An alternative to traditional bank financing, known as 401k small business financing or Rollover As Business Startups (ROBS), allows you to tap your 401K retirement funds to buy your own small business or franchise. Because you are using your own money, unlike Revenue-based financing, the Rollover As Business Startups funding strategy does not take any of your monthly revenue, everything you earn is yours! In addition, a ROBS transaction may take as little as two weeks to process giving you access to your money just as quickly as Revenue-based financing. With any loan transaction, it is highly advised that you work closely with an attorney and compliance professional who can guide you through the entire process to ensure compliance with IRS guidelines
To learn how to rollover an IRA to a 401k for business financing purposes, check out this page at MySolo401k.net
