Funding a new business when banks aren't lending
We are all well aware of the trying economic hurdles our nation has been enduring for several years now. The housing crisis was key to countless families losing their homes. The aftermath of this event was the initial domino that precipitated the closure of many businesses throughout New Jersey and elsewhere in the nation.
With all of the negative financial news flooding the media, it is always refreshing to hear of new business ventures being created. Moreover, it is interesting to hear of the creative methods being utilized to initiate a business start-up.
A familly trio from Florida, in an attempt to start-up their own business, a steakhouse in Ormand Beach, needed to tap into some creative financing when trying to fund the purchase of their dream restaurant venture. Naturally, the first door they knocked on was their own bank. Unfortunately, like many individuals looking for loans, they were not able to secure the necessary funds.
Instead the trio turned to the funds in their 401(k) accounts. A new program allows individuals who wish to self-fund their business ventures to withdraw retirement funds without penalties from the IRS. One of the many benefits to such an investment is that the new business begins with little to no initial debt.
While financial experts warn against the usage of personal funds in such tough economic times, it is a viable and legal option for eager entrepreneurs. Sitting down with an attorney with experience and knowledge on the various avenues to begin a new business can provide valuable insight and assurance that your new investment is starting off on the right foot.
Source: News-Journal, " Trio buy Ormond business with funds from own 401(k)s ," Valerie Whitney , Oct. 9, 2011