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[STK]
[IN] FIN
[SU]
TO BUSINESS EDITORS:
Positive Forecast For American "Mid-life Entrepreneurs" Clouded By
Current SBA Loan Realities
PARKER, Colo., April 2, 2014 /PRNewswire/ -- First, the good news:
according to a study funded by MetLife Foundation, based on a survey
by Penn Schoen Berland, approximately 25 million people - one in four
Americans ages 44-70 - are interested in starting their own businesses
or nonprofit organizations in the next five to 10 years.
Now, the less-than-encouraging news: between 2007 and 2013, bank loans
guaranteed by the U.S. Small Business Administration fell 60 percent.
This is according to a report by The California Reinvestment
Coalition.
For an added dose of irony, the MetLife study also finds that nearly
six in 10 (58 percent) of these future entrepreneurs say the current
economic crisis makes them more likely to start their own businesses
or nonprofit ventures.
In summation, the very factors that have contributed to the rise in
entrepreneurial aspirations may also be responsible for the apparent
lack of available small business funds.
If the downward trend in SBA loan approvals continues in the coming
years-or even if it were to begin to slowly rebound-where does that
leave the millions of would-be mid-life entrepreneurs?
A survey, titled Who Started New Businesses in 2013, and conducted
with companies recently formed using LegalZoom, may help shed some
light. It says the use of personal savings to fund a startup business
jumped from 66 percent in 2012 to 86 percent in 2013.
What, specifically, do those personal savings include? One could
surmise the use of checking and savings accounts, personal collateral,
and funds or direct withdrawals from retirement accounts like 401ks or
IRAs.
According to Bill Seagraves, president of CatchFire Funding, another
means of self-funding could be responsible for the shift. "In the past
year, our leads have nearly doubled," said Seagraves. "Once people
learn about the benefits of utilizing a self-directed 401k to fund
their business, it usually doesn't take long to make a decision."
A self-directed 401k is a method of using retirement monies currently
in an IRA or 401k to invest in a business. Different than taking a
loan or direct withdrawal, both which are subject to fees, penalties
or other restrictions, a self-directed 401k utilizes pre-tax dollars
so there are no penalties or interest to pay.
"Capital is the lifeblood of small businesses and entrepreneurs
wanting to start a business. It's frustrating that at a time when
these individuals need access to funds, so many are being turned away.
What the SBA is doing is tantamount to a hospital announcing it's out
of medicine, then doing nothing as its patients suffer," said
Seagraves. "My mission is to pick up where the government is failing
by providing entrepreneurs a means in which they can fund themselves
through a self-directed 401k."
It may be too early to make a direct correlation between the use of
401k funding and the 20 percent rise in personal savings funding
sources, but it does provide a viable option for those tens of
millions of Americans hoping to start their own businesses amidst
today's rigid SBA loan approval standards.
CatchFire Funding is a firm dedicated to assisting clients in the
effort of unlocking financial solutions for business ownership,
specifically in the realm of business and franchise ownership. They
specialize in 401k rollover and IRA funding options that aid clients
in achieving financial freedom through long-term, wealth building
strategies.
Press Contact: Susan Baloun Email 702-526-0590
http://www.encore.org/EncoreEntrepreneursRelease
http://www.calreinvest.org/news/new-report-finds-60-drop-in-small-business-lending
http://blog.iese.edu/bizknowledgewatch/2014/who-started-new-business-in-2013-in-u-s/
Read more news from CatchFire Funding.
SOURCE CatchFire Funding
-0- 04/02/2014
CO: CatchFire Funding
ST: Colorado
IN: FIN
PRN
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0000 04/02/2014 12:30:00 EDT http://www.prnewswire.com
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