Which option is best for a new biz startup, investing in an established company?
I am starting a new business which will purchase investment shares from a successful company that is expanding into new market areas. The company has a proven track record with income statements and documentation to support it’s purpose. I am familiar with the owner of the company and I know that my startup costs will be approx $400,000. Which option would be best for me, considering I don’t have the capital?
There are many options that you can learn more about in our article on startup business loans. Generally, if you have at least $50K in an eligible retirement account (401k, IRA, etc..), then we suggest using a rollover for business startups (ROBS). This will only work if the money is going into a business you plan on working at full time and that is a C-Corporation, however.
You may also want to consider getting an SBA loan, or using your savings combined with any money you can get from friends and family. Keep in mind, however, that $400K is a lot of money to use as a long term investment if you don’t have the funds. Any method you choose, unless the ROBS works or you have the money lying around, will come with a hefty price tag.