Using 401K/IRA Funds to Satisfy SBA’s Equity Injection Requirements
What is a BORSA™ (Business Owners Retirement Savings Account) Plan?
Simply put, it’s a self-directed 401(k) plan that allows you to access retirement funds (401(k), IRA, other qualified funds) TAX and PENALTY FREE to use as equity in a business start-up, acquisition, or to add more capital to your existing business. Typically if you “cash out” (take a distribution) from a qualified plan you would be taxed as ordinary income. You would also be hit with a 10% penalty if you are below age 59-1/2. The combination of state and federal income tax as well as the penalty can result in an erosion of 40-50% of your retirement savings.
DRDA CPAs & Business Consultants has a solution – The BORSA™ Plan. This structure allows you to transfer money currently held in your qualified retirement accounts into a new business without a deemed distribution, taxes, or penalties.
Using a BORSA Plan to Leverage an SBA Loan
Are you considering a business or franchise acquisition? Do you plan on using SBA financing to get your deal done? DRDA’s BORSA Plan – a ROBS structure – allows you to access your retirement funds tax and penalty free and use those dollars in your business. You can then use these funds as your equity injection or down payment in an SBA 7(a) or 504 loan. DRDA has helped thousands of entrepreneurs since 2005 to secure their business acquisition financing via the BORSA plan. We teach this concept to lenders across the country so they may help their borrowers realize their dream of business ownership. If you’d like to learn more about using retirement funds tax and penalty free in conjunction with an SBA loan please contact Suzy Granger at 281-954-6023 or suzy@drdacpa.com
- Structuring 401K Equity Injection, How it Works
- How to structure with SBA financing
- Satisfy the equity injection requirements
- SBA Eligible Candidates
- How to Structure These Transactions to Ensure Timely Funding to Meet the Deadline
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Bob Coleman, Publisher, Coleman Report
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Suzy Granger, National Business Development Officer, DRDA
Suzy Granger assists small business owners by helping them access funds in their qualified retirement plans WITHOUT taxes or penalty in order to purchase, start, or recapitalize a business. Her referral network includes business brokers and SBA Lenders. Suzy welcomes opportunity to add you to that network.
Bob Coleman is the Author of “Money Money Everywhere and Not a Drop for Main Street.” He is the Publisher of the Coleman Report, a trade newsletter and website for SBA and small business lenders. He produces online training videos and webinars for small business lenders to teach them to make less risky loans to Main Street.
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Questions
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Replay Link
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Bob Coleman
Editor, Coleman Report
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