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11 Oct 2016
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What’s the Timing on Using Retirements Funds as a Down Payment on an SBA Loan

A BORSA (Business Owner's Retirement Savings Account) Plan allows you to access retirement funds (401k/IRA/others) WITHOUT tax or penalty erosion. DRDA CPAs & Business Consultants will work with you to transfer funds from an existing fund into a new 401K plan using the following steps:


1. DRDA will establish a C Corporation in the state you will be doing business

2. DRDA will establish a 401k Profit Sharing Plan for that C Corporation.

3. You will roll retirement funds (all of a plan, portions of plans, multiple plans) into the new 401k plan account.  This is a qualified rollover - from plan to plan - so there is no tax or penalty.

4. From the 401k plan you will make an investment decision.  Through the new 401k plan you will buy stock - in your new C Corporation!

5. The dollars have now transitioned into your corporate checking account and available for any business purpose, including leveraging against a loan.


The majority of clients using BORSA are actually doing this to come up with their down payment in an SBA 7(a) loan. A frequent question is "What about timing?".


The process takes 30 days from the time you engage to the time you have funds in hand ready to go to closing.  It's important that you and the lender both understand this 30 day timeline and make sure of the following before proceeding with a BORSA Plan:


1. You have your deal together

2. You have somewhat of a nod from your lender

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