The survival rate of those launching new businesses with their retirement funds is significantly higher than those using traditional debt-based financing. This, at least, is the indication of a recent survey by Guidant Financial Company of Bellevue, Wash. Guidant, which specializes in helping entrepreneurs tap their retirement funds to buy a business debt- and penalty-free, found that their clients are experiencing a 95% survival rate.
According to the SBA, 75% of small businesses survive at least two years, and about 44% survive at least four years. Although Guidant’s results were based on the responses of clients who have been in business anywhere from a few months to five years, the success rate is nevertheless significant when compared against national averages.
According to Guidant’s CEO David Nilssen, any kind of debt-service can seriously handicap a new business. “The average SBA loan for $100,000 can demand up to $6,000 in interest in the first year of business alone,” says Nilssen. “When a new business owner can, instead, use those dollars to invest in the growth of their enterprise, their potential for success increases significantly.”
Nilssen also reports that, according to client testimonials, the ability to direct their retirement dollars into an asset they can personally control is one of the factors that drives them to succeed.
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