I am looking to finance a franchise with upfront fees of $60,000 plus living expenses for first few months. My options are Benetrends 401k rollover (penalty free)vs. SBA loan.
pro`s and con`s
SBA- aprx $2500 closing cost, payback starts immediately, 2-3 % above prime, Adjustable rate (or so I`ve heard), can ask for first 6 months expenses (I am assuming this is realistic)
Benetrends Rainmaker Plan- Aprx $6500 closing costs, ongoing administration fees of $1000 year, gives me a 401k to invest in while I am employed by my company, allows me to pick the funds I would like to invest in (Vanguard, T Row Price for example), give potential exit strategy to roll profit form sale of business back into 401k when company is sold.
Knowing this, is it smart to use my retirement savings to invest in my business?
Is there anything I need to consider that I may not have mentioned?
Is there any financial option I am not aware of?
Info that may help in your reply: I am 41 years old, the 401k has $66,000 in it,my credit rating score is high in excess of 800, If I go with the Rainmaker Plan I would either do a signature loan for the first 6 months of living expenses, or use my cash reserves in bank to cover expenses during start up. The Franchise rep, gentelman form Entrepreneur`s Source, and the rep from Benetrends all recommend the 401k roll over because its quick and there is no business plan to wrestle with...of course they don`t make any money till I sign on the dotted line so that makes me want to investigate the opinions of unbiased people who have or are in similar situations and see what you have done. Any help is appreciated.