Guidant Financial Group Blog

BusinessWeek recently featured Guidant in an article about 401(k) Small Business Financing (See Need a Loan? Tap Your 401(k), Without Penalty).

In the article, reporter Brian Bunrsed talks to two 401(k) Small Business Financing clients and explores the opportunity to finance a business venture with existing retirement funds.

Guidant clients Tim and Terry Madden told Burnsed that they decided to use retirement funds because they "didn't want to rack up huge piles of debt in a turbulent economy," even though they qualified for a traditional loan.

Many prospective clients are in the same boat as Tim and Terry. While there are still loans out there (yes, really!), the terms are not nearly as attractive as they once were and, for many people, investing in their own business provides the opportunity for greater gain than investing in the stock market.

As with any business, there is risk. What is unique about 401(k) Small Business Financing, though, is that it caps your risk at a specific amount. What many financial experts don't realize - or don't want to realize - is that using retirement funds can actually be less risky than a traditional loan. While there still is the possibility of losing the business and your retirement savings, many people would agree that this can be a more attractive risk than losing your business, still owing the bank principal plus interest, and having to declare bankruptcy and suffer the mark on your personal credit for 7-10 years.

Don't get us wrong, 401(k) Small Business Financing is not for everyone. But, as you can tell from the 16 comments and counting on this recent BusinessWeek article, there are still a lot of skeptics out there who haven't truly compared 401(k) financing with other vehicles.

This is a viable, allowable and logical way to finance a business. And in times like these, why not investigate all your options? Your 401(k) may really be the source of your future financial freedom.

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