BoeFly Logo

BoeFly Transactions

Previous Issues
Issue 30: Loan Sale Premiums Hold Steady in November

Issue 29: Proper Risk Management Protection and Credit Worthiness

Issue 28: BoeFly Helps Veterans With Disabilities Connect With Lenders to Obtain Small Business Loans

Issue 27: Loan Sale Premiums Level off in October

Issue 26: SBA Secondary Market changes - Warranty Period and Premiums on New Larger Loans

Issue 25: BoeFly Surpasses the $1 Billion Transaction Mark

Issue 24: Loan Sale Premiums Continue Climb in September

Issue 23: Robert Tannenhauser, CEO of BoeFly, Interviewed by Michael McKee on Bloomberg Radio

Issue 22: Lender Optimism is up While Anxiously Awaiting the Small Business Jobs Bill

Issue 21: Loan Sale Premiums Blast to Record Highs in August

Issue 20: Title Insurance- the Lender's Perspective

Issue 19: Condemnation and Mortgage Lender's Rights

Issue 18: Long-Term Deals Continue Record Climb; Short-Term Deals Fade

Issue 17: Congressman Walt Minnick (D-Idaho) Gets It

Issue 16: Deeds and Forms of Ownership

Issue 15: SBA Loan Sale Premiums Hit Record High in June

Issue 14: What You Need to Know About Property Insurance

Issue 13: SBA Fixed Interest Rate Loans are an Important Product to have at the Ready

Issue 12: 504 Guaranteed Pool Program Summary and Survey Results

Issue 11: Loan Sale Premiums Surge to Record Highs in May

Issue 10: Environmental Risk for Lending Opportunities

Issue 9: How To Take Advantage of the First Lien Position 504 Loan Pool Guarantee Program

Issue 8: Investors Remain for SBA Loans

Issue 7: Retirement Funds for an Equity Injection - Selecting the Right Plan Provider

Issue 6: Why Outsourcing Environmental Risk Management makes Cents for Lenders

Issue 5: Loan Monitoring: Comfort in a Crisis

Issue 4: BoeFly Case Study: The economics of selling SBA guaranteed loans

Issue 3: BoeFly Lender Survey Results Q1 2010

Issue 2: Loan Sale Premiums Rally in Q1

Issue 1: The Importance of Efficiency in Secondary Markets

Accessing Retirement Funds for an Equity Injection - Tax Deferred and Penalty Free

Best Practices for Selecting the Right Plan for a Borrower

By BoeFly Member: Larry Carnell, Vice President of Business Development for BeneTrends, Inc.

Share this article:
Bookmark and Share

Thousands of business borrowers have helped meet their equity injection requirement for SBA and conventional loans thanks to an innovative solution that allows owners to access their existing retirement funds. The program, often referred to as 'Rollover for Business Start-ups,' takes advantage of well-established tax and retirement benefit rules.

A tax deferred way to invest retirement funds in the borrowers company

Here is how it works: instead of investing in stocks of companies through a mutual fund, one invests (part or all of their retirement funds) in the stock of their OWN company, thereby enabling the entrepreneur to invest in themselves. In 2008, the IRS took a closer look at how these plans were being marketed and supported. The IRS then issued a memo in October of 2008 discussing the examination guidelines for the products. While some providers saw this increased government attention as the time to exit the market, others believed that appropriate standards are vital to the product's long term health. In light of this increased government scrutiny the selection of the right plan provider is critical. Below is a checklist of diligence questions that a borrower should ask a prospective provider:

What is the service provider's track record of doing it right and how many plans have they issued?

It is important to know that a provider has the expertise and experience to deliver both on the creation of a plan and to support the plan for the duration - and thus maintain IRS compliance. For example, a track record of expertise and experience provides the best assurance of protecting and maintaining the SBA guarantee for SBA loans.

Is the service provider a full service retirement plan design company and is that their core competency?

Accessing one's retirement funds has both short and long term benefits and consequences for the business. A service provider that offers a variety of retirement plan vehicles can help maximize benefits and limit negative consequences. Simple 401(k) plans can enable one to access their retirement funds but may result in significant tax consequences. The ability to offer a variety of plan designs can significantly impact a business both short and long term.

Does the service provider offer a written guarantee?

It is vital to know that a service provider stands by their work - both at creation and beyond. Ask the service provider if they offer a guarantee and press them to understand what it means.

Much of the IRS concern has to do with the ongoing maintenance of these programs

Does the service provider support the ongoing plan administration?

Much of the IRS concern has to do with the ongoing maintenance of these programs. Best of breed providers now require that the plan include ongoing administration functions, which helps to ensure that the plan will remain compliant. Service providers that allow the customer to opt out of ongoing administrative services to "save money" can be a recipe for non-compliance.

Larry Carnell, a noted expert, award winning management consultant and lecturer was the first to use this resource in the franchise and business brokerage industry during the 1990's. He has since joined BeneTrends as their Vice President of Business Development. BeneTrends is a leader in business funding and retirement solutions. For additional information visit Larry's BoeFly Services Network page or visit: