Searching For Capital? Use Your 401(k)
Searching for capital? The New York Times' You're the Boss blog suggests an option--using your 401(k) to invest in or purchase your small business (as opposed to taking a loan from your retirement funds).
These methods let small business owners roll over funds from a 401(k) to purchase shares of their own company, or even buy a small business, the Times explains--and because this method of funding doesn't operate on a debt model, individuals can make small business investments without paying interest or dealing with a payback window.
This kind of funding option has become more popular amid the current squeeze on capital, the blog notes: Inquiries at Guidant Financial, in Bellevue, Wash.--which specializes in alternative small-business financing--jumped 196% between 2009 and 2011, the Times reports.
One caveat: Be sure to use an accounting specialist, since these plans need to comply with both IRS and ERISA law.
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