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Article by, The Entrust Group

When starting a business, you likely want to explore as many avenues for start-up capital as possible.  Banks have tightened their loan policies lately, making that avenue a challenge, and while there are some grants available for small businesses, chances are that the majority of your funds will come from interested investors. Investors can come in many packages, but we’re here to introduce you to the wealth of opportunity presented by self-directed IRA investors.

Who are Self-Directed IRA Investors?

Self-directed IRA investors are just like any other investors, except that they are using retirement funds to make their investments. Investing with a retirement account brings certain benefits to IRA investors that aren’t available to the standard investor, such as tax-deferred or tax-free earnings.

The standard IRA or 401(k) investor will not be able to invest in a start up business because most banks and financial firms to do not offer a platform for these types of investments.  Self-directed IRAs, by definition, allow for alternative investments, such as private equity or real estate, so it is investors that self-directed their retirement funds that will be looking for investment opportunities with entrepreneurs.

Can Self-Directed IRA Investors Help Grow Your Business?

The simple answer is; yes. Because self-directed IRA investors have the ability to invest in private companies, many are looking for the opportunity to grow their funds alongside a small business. Especially with the tech boom of recent years, it seems everyone wants to be part of the next big start-up.

Similarly, you may already know someone who wants to invest in your business, but has been unable to because of a lack of funds. Chances are these people don’t realize there is a huge opportunity available to them by using a portion of their nest egg. With self-directed IRAs, your neighbor or your cousin could be your next big investor!

(Note: certain family members and others close to the IRA owner may be considered disqualified for investment purposes.  Please refer to section 4975 of the Internal Revenue Code for details about disqualified persons)

About the author:  The Entrust Group is a third party administrator of self-directed savings accounts, including IRAs, HSAs, and ESAs. The Entrust Group does not recommend or endorse any investments/investment opportunities, nor give investment/financial advice. The company offers investor education to create empowered investors through the Entrust Learning Center. Learn more here, or contact one of their IRA specialists.