Unconventional IRA Structure Provides Little Known Business Funding Options
Although thousands have discovered this golden opportunity, some of the savviest lenders and borrowers are still unaware of this remarkable funding option: Individuals can utilize their IRA monies before retirement age to purchase a business or leverage a loan without incurring early distribution penalties.
Thanks to the government’s 1974 ERISA laws, borrowers can self-direct up to 100% of their retirement funds into investments that include the purchase of a business or franchise. This option is ideal for those who want to improve their odds of securing leverage by providing a substantial down payment on SBA, conventional, commercial or other loans. While IRA, 401(k), Keogh, SEP, and other retirement funds could be used in this way for the past three decades, it’s only been in recent years that business and franchise buyers have begun seizing this opportunity.
By using a structure similar to that of a self-directed IRA, a borrower can help finance their entrepreneurial endeavor. The benefits and risks of tapping IRA funds to help finance a business or franchise purchase can be many and we recommend that you speak to a professional in this area along with your accountant and attorney.