One of the most appealing aspects of being a small business owner is having the freedom to make the best financial decisions for yourself and your company. While funding options may seem endless, working with an experienced and trusted funding partner is key in understanding the benefits of each path you consider. Among them, you may be surprised to learn your 401(k) offers particular advantages to your entrepreneurial pursuits.
Using Your 401(k) to Finance Your Business
There are many advantages to using 401(k) funds – or other qualified pre-tax retirement funds like a traditional, non-Roth IRA, TSP or 403b – to finance growth expenses for your business.
- It’s your money: Simply put, the funds in your 401(k) are your money! You personally are investing in your small business when you use these funds. Unlike a loan from a bank, credit union or other financial institution, applying 401(k) funds to your business means increasing your equity in your business by investing money you already have. You have earned and saved each dollar in your 401(k), and you have the financial freedom to determine how to use it.
- Ease and convenience: Utilizing 401(k) funds minimizes the amount of time involved in applying for and securing funding from outside institutions. A 401(k) Rollover can be achieved in as little as three to four weeks, since you are not applying to an outside lender for a line of credit or a loan. Instead, you can spend your time focusing on your business goals and putting your funds to use.
- Avoid debt: The most significant difference between 401(k) Rollover Funding and other borrowing options is that with your 401(k) there is no “lender” involved. By utilizing your own retirement dollars, you’ll avoid being in debt to another financial institution.
- Repayment goes right back to you: Once you’ve put your 401(k) rollover funds to good use for your business, you are the sole person who reaps the benefits of repaying the funds back into your account. Payments restore the balance of your 401(k) and any interest payments are added to the total sum of your account.
Whether you’re in the process of bringing your small business to life or expanding your existing goals, Tenet Financial Group has the experience and knowledge to answer your 401(k) Rollover questions and help determine the funding path that is right for you.