- July 12, 2018 at 4:46 pm #217252
I started my small business with Retirement Account Funds, and while getting it to grow, periodically loaned money to the business using personal funds. Now about 4 years old, the business is doing well, and I would like to pay myself back by restructuring that loan. Are there firms that do that. The ones I have looked at do not. Thanks for your insight.July 12, 2018 at 5:23 pm #218561
Dock David TreeceModerator
Hello, John, and thanks for your question.
Unfortunately, it’s difficult to provide an answer to your question because it’s a very complicated subject. From what you’ve said, it sounds like you may have used a ROBS to start your business. If that’s the case, there are special regulations that you need to be careful to follow when managing your company finances. For that reason we always recommend that someone work with a ROBS provider.
If you did use a ROBS and need a quick answer to your question, Guidant is the ROBS provider that we recommend and may be able to help you resolve this issue with a quick call.
However, from what you’ve outlined above it also sounds like you could have used some other kind of 401(k) business funding, such as borrowing against a 401(k). If this is the case, what kind of loan you get to restructure your business’s current liabilities will depend in large part on what type of business you have – but most providers will not want their loan funds going into your pocket. SBA loans won’t work – they almost all require equity injections rather than taking cash out.
If you’re looking for a loan specifically to repay the money you lent your business, your only way to do that may be with a business line of credit. Be aware that these loans are short-term only and typically carry interest rates much higher than more traditional loan products, but it’s probably your best bet for getting a loan that will give you the flexibility to pay yourself back.
Hope this helps,