Dec 20, 2016

IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses.  The following blog article has been provided by David Nilssen, CEO and Co-founder of Guidant Financial (

Buying a Business Using 401(k) Assets

When it comes to small business financing options, it’s usually traditional funding methods that come to mind: working capital loans, SBA loans, business lines of credit, etc. But did you know an alternative option exists that’s allowed thousands of entrepreneurs to launch businesses debt-free?It’s called a Rollover for Business Start-up (ROBS), and it enables individuals to leverage their own retirement assets to buy a business without having to pay any tax penalties or get a loan.

The ROBS arrangement was made possible by the Employee Retirement Income Security Act (ERISA) of 1974 and has since made the dream of business ownership a reality for many. Here are some of the key benefits of using retirement funds to buy a business:

  • Launch a business with equity — not debt. By funding your business with assets you already have, you won’t have to make monthly repayments or worry about interest rates. Plus, because the ROBS structure doesn’t trigger an early withdrawal penalty or other fees, you can put more of your money to work for you.
  • No collateral/credit requirements. The only requirement for 401(k) business financing is to have a ROBS-eligible retirement fund(more than just 401(k)s qualify) with more than $50,000 in rollable assets (we’ve found lesser amounts aren’t as advisable/worthwhile). As such, you won’t need to jeopardize your home or personal credit as collateral unless you’re applying for other, more traditional business funding methods … which brings us to our next point.
  • You can use ROBS funds as the down payment on a loan. If you plan on going the more traditional funding route, you can avoid pulling from your personal cash reserve by using the money from ROBS as the cash injection.
  • Invest in yourself, not the stock market. While the stock market may be doing well right now, it’s just a matter of time until its next dip — which means less money for investors. With such uncertainty, why not use your money to invest in yourself and your dreams?

Just like any investment, using retirement assets to start a business can carry some risk, but for many, the ability to own a business and control their future outweighs any downfall.

If you want to learn more around ROBS, we debunk some of the most common myths here.

Or see the original article on debt-free business financing.

David Nilssen is the CEO & Co-founder of Guidant Financial, a small business financing company that helps entrepreneurs identify, evaluate and deploy intelligent business funding strategies. Read more tips about finding and financing your business on the Guidant blog at  Additional information on Guidant Financial and the funding strategy can also be obtained by contacting IBA’s Guidant Representative, Nita Ku, at (425) 326-4603 or


IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.