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How To Fund A Small Business Without Risking Your Retirement Funds

How to fund a small business without risking your retirement funds

How to fund a small business without risking your retirement funds. When you have funds tucked away in retirement accounts, it may be tempting to go after that money to launch your company. Currently, the most popular type of SBA loan has a maximum interest rate of 6.25% (loans over $50,000) to 8.75% (loans under $25,000). Currently, the typical interest rate on a home equity credit line is around 5%, but rates are on the rise. Interest rates now range between 3% and 4% typically. A stock-secured line of credit is often less costly than a HELOC or a brokerage margin account; the current rate is typically 3% to 4%. Often, repayment is interest only. The risk for using stock to secure a line of credit: it may result in negative credit implications if you are unable to repay the loan. Then, you’ll have an agreement for how a partner can exit. Business owners should be aware that pursuing financing through percentage of ownership could be an impediment to obtaining traditional financing later and that crowdfunding sites do not typically offer intellectual property protections.