If you have a 401K, it’s possible to fund your business without seeking help from friends or family. If you don’t have one but know someone who does, they can lend a hand, benefiting from the interest on their assets without any actual financial outlay. Our 401K financing option offers a flexible and robust solution for both new and established businesses, franchises included, to tap into 401K or IRA funds.
Within about three weeks, you can redirect a portion of your retirement savings to your business venture. Securing funds via this method is quite straightforward; your credit history or score doesn’t play a pivotal role. The lender merely requires your two most recent 401K statements to commence the funding process.
This funding approach is called a “401K Rollover for Working Capital” or, in other terms, a Business Startup Rollover (ROBS). It isn’t a standard loan drawn against your 401K so that you won’t be burdened with interest repayments. Instead, it involves a change in trusteeship. If your 401K has a balance of at least $35,000, you can qualify, even if your credit score isn’t stellar. The amount you can finance corresponds with the portion of your 401K that can be rolled over.
Remember, the 401K in question shouldn’t be linked to your current employment. It must originate from a prior job, ensuring you aren’t actively contributing to it. A minimum balance of $35,000 in the 401K is mandatory.