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ROBS Plan Benefits
Believe in Yourself - Invest in Yourself
Utilizing the ROBS strategy is a great way to invest in yourself and finance the purchase or growth of your business and potentially avoid the hassle of qualifying for credit. Even if you have good credit, you still have to deal with rigorous underwriting standards that are not geared to new businesses.
In case you have not experienced this before, banks tend to frown on new business lending and generally tighten their credit criteria and ask for more collateral. From their standpoint, there is simply too much risk with new business startups.
If you do need to secure a loan (ie. SBA) to finance your new venture, you will still need to come up with cash for the down payment and for other related loan costs like origination fees. Using your retirement funds for that "gap" can make a lot of sense as it allows you to keep your non-qualified money at your disposal for personal and other expenses.
Key Benefits
- Access retirement funds tax penalty free
- Reduce debt payments
- Minimize exposure to rising interest rates
- Avoid turning over collateral to a lender
- Establish a new pension plan to continue to invest in yourself
- Maximize your own contributions and tax deductions
- Incentivize key employees
Note: There are IRS and DOL regulations in place to ensure that the transfer of retirement funds without incurring a penalty is not abused. It is important to understand that any and all retirement funds transferred through to your business checking account must be used for legitimate business expenses. If you want to use some of your retirement funds for personal reasons, you may want to consider the Solo 401k and its' loan provision, which does allow for that.
Note: You are required to be an employee of your new business and actively involved in the business. While you are not required to take a salary, you may take a "reasonable" salary once the business is generating revenue. An absentee owner may want to consider the Solo 401k plan.