Looking to finance your invention success at a time when banks aren’t the most open lenders?
We’re hearing talk that banks may soon start opening their vaults again. We’re also reading that the government’s Small Business Administration (SBA) under President-elect Obama may offer new financing opportunities to America’s inventors, entrepreneurs and other small business owners.
And BusinessWeek recently reported a creative alternative way to finance your invention right now: applying your 401k funds towards your invention without a tax penalty. That’s right – if you believe in your invention, you can put your 401k funds to work making your invention a reality. How:
- Create a corporation – let’s call it You, Inc.
- Create a 401k plan at You, Inc.
- Roll your existing 401k funds into the You, Inc. 401k plan
- Invest You, Inc. 401k funds to buy You, Inc. shares (stock)
Sounds complicated at first. But it's actually pretty simple -- you're just moving 401k dollars from one place to another and investing them differently... without taking a distribution that would spark immediate tax consequences. Several firms offer to do all the set-up for a modest fee.
Click here to read the full BusinessWeek article on this approach and how entrepreneurs have successfully used it.
What do you think? We would never advise someone to tap into his or her nest egg for any invention. But we also think it could be a very smart decision to tap into part of a nest egg for an invention that you know will be HUGE one day.
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