How to Get Money to Start a New Business from Your 401K Retirement

The most successful startups don’t use just one source of financing for their business loan needs. Instead, they develop a strong foundation of multiple funding sources to launch their firm.

Our finance experts studied the startup business loan market in 2018 and are reporting the results to you. So that you can get the money you need to become an entrepreneur.

The best sources for start-up financing and business loans in 2017

  • Your Money
  • Lenders Money
  • Other People’s Money

Your Money

The first and best place to look for startup financing is your existing assets. This will be the least expensive, fastest and easiest way to get your new business funded. Using your own money is not risk-free. You could lose all or most of your savings, retirement account and IRAs. These funds could be used as collateral for future funding phases and business loans.

Rollover For Business Startups (ROBS)  – Use your retirement savings for startup business loans

Quick facts – Rollover as business startups (ROBS) programs give you the option to invest the money’s that is in your retirement savings account for your new startup loan without paying penalties for early withdrawal or additional income taxes. Your ROBS account is not a loan against your IRA, nor are you cashing out your retirement account neither are you withdrawing funds.

Fees – initial fees average $5,000 and annual fees are $1,500

Synopsis – using the right professional advisors and recommended firms you can access your retirement IRA accounts to finance your new venture without being penalized by taxes or early withdrawal deduction fees.

How it works – The financial institution sets up a program where you are buying stock in your company. With the monies in your 401(k) and IRA’s, the stock shares. of your startup firm, are held in your retirement account. Essentially you are purchasing shares in your new firm as an investment in your IRA retirement account. Most IRAs offer options to buy stocks in established companies as investments. This program makes your new venture, one of those approved companies for stock purchases as investments.


C Corporation business structure
– Your startup must be set up as a C Corporation to participate in this type of program. When your company is successful and begins paying dividends to shareholders your retirement account will receive those funds from the portion of stocks you own.

Business Owner Full-time employee
You, as the majority business owner, must be a full-time employee of your startup business. So robs Rollovers for Business Startups work well for closely held businesses. It is not recommended for those businesses managed from afar, often referred to as absentee companies or silent partners.

Combined with other forms of business financing
ROBS do not need to be the only source of startup business loans. In fact, they are particularly useful for down payments on SBA loans or other forms of startup business loans.

Recommended for entrepreneurs

This kind of startup financing ROBS rollover for a business startup is recommended for these type of startup companies:

• Operated by majority business owner
• $50,000+ in retirement accounts
• High-Profit margin industries
• Well-organized with good records

Related Posts

Get started image

Ready to get started?

Get the expert support you need

Related Articles

The Best Businesses to Start With 10k

by Team ZenBusiness, on April 11, 2024

Online Marketplace Ideas for Aspiring Entrepreneurs — Start from $500 to $5000

Team ZenBusiness, on April 24, 2024

A Financial Checklist for Starting Your Business

by Team ZenBusiness, on April 11, 2024

Successful Business Ideas You Can Start with 2K

by Team ZenBusiness, on March 15, 2024

Where to Get Money to Start a Business

by Team ZenBusiness, on March 04, 2024

Start Your LLC Today