Navigating Franchise Financing Options
Previously, I talked about some of the different types of financing that's out there. There are home equity lines of credit, portfolio loans and small business administration loans. There are also ROBS (Roll Over for Business Start-up), which is a self-directed 401k.?
One of the things I help people do is find out which types of financing are best for them and oftentimes it's a combination.?
Understanding the Real Financial Landscape
The first thing I want to assure you is that almost no one I work with, regardless of their financial net worth, has $50,000 to $150,000 just sitting in a savings account or a money market waiting to invest in business. That's actually very rare. Normally what I find is people have money invested in the stock market, they have money in their retirement, they have equity in their house, maybe they have a small amount of savings, or they have money that can be lent to them by a family member or a business partner. I sit down with you and try and determine which of those different programs are the right fit.?
Weighing Your Retirement Options?
I have talked a lot about the Rollover for Business Startup or what we call ROBS. This is where you create a self-directed 401k, and the business actually becomes the asset of that 401k. In this case, you can take money out of your retirement, whether it's an IRA or 401k and put it into this new program. These are IRS approved programs that allow you to access these retirement funds without any taxes or penalties.? Also there are tax benefits that many people are interested in learning more about. People often come to me and they say, “Oh Page, I don't want to touch my retirement, that's set aside for when I turn 65. I don't want to put it at risk.” I let them know that one of the things that they might want to think about is if all that money is in the stock market, what happens if the stock market takes a downturn and you're reliant on that money to pay your regular expenses? These are things you need to consider, and talk with your CPA and Financial Planner about.
?Expert Guidance
Sometimes people will take a portion of that out and put it in a business which is a new asset class, and then that business will provide secondary income for them like a 401k or an IRA would when you go into retirement. There's also a lot of tax advantages around it too, especially when you go to sell the business and you have capital gains to consider.?
It's kind of complicated, but it's something I can help you with. We have many companies that we work with that can take you through the nuts and bolts of the ROBS program. They also do all the other types of financing that I talked about.?
Feel free to just click on my Calendly link using the QR code below and we can talk about it more.