As the credit crisis continues, small business owners are finding it more and more difficult to obtain business funding they need to either sustain or to start up operations. Utilizing a Self Directed IRA, may well be the “best” solution for funding a Franchise.

A recent article entitled “5 Unconventional Ways to Fund Your Franchise” by Jeff Elgin, CEO of FranChoice Inc. was posted on Entrepreneur.com.

Mr. Elgin’s article is focused on the fact that “the credit crisis has made funding a new franchise much more difficult.” However, he points out that “solutions exist, but they often require some out-of-the-box thinking and aggressive efforts on everyone’s part.”

Among the assets and resources not often considered (non-traditional) are the following:

Direct financing: franchise companies now provide direct financing to their franchisees, if a franchisor is financially strong enough to provide such a program.

Third-party lenders: franchise companies have arranged indirect financing or leasing programs for their franchisees with third-party lending vendors.

Angel investors: these sources are individual or corporate investors looking for upside potential to increase their returns.

Low-cost franchises: franchises available with a lower initial investment than the typical retail or fixed-location startup, mostly home-based or service businesses.

Savings: prospective franchisees are accessing their retirement plan dollars to invest in their franchise. This strategy uses a Self Directed IRA and requires specialists who can assist you in setting up this type of program and make sure it’s done properly.

This last funding strategy (using retirement savings) offers some excellent advantages:

- An all-cash purchase of a business eliminates the need for debt financing
- Funds can be used as a down payment to secure additional financing
- Profits enjoy tax-advantaged status by being directed back to your 401k
- As an owner of the business, you may draw a salary and receive benefits
- Family members may be employed by the company and draw salaries

To find out more about using a Self Directed IRA for Franchise or Business Funding, call Safeguard Financial at 877-229-9763, or click here Business Funding Plan.