restaurant financing

401K Conversion for Financing a Restaurant


The Bank of You is also known as your own 401K savings. Restaurant buyers often overlook these funds as a source of capital for financing a restaurant purchase without realizing there are multiple ways to use 401K funds without facing a large tax bill from your Uncle Sam.


The easiest approach is to borrow against your 401K. In this option, you are able to simply use your own money as the security or collateral for a loan. The advantages of this option are:


Quick and Easy.


Credit Scores can be marginal as long as appropriate security is in place.


The second and most frequent approach the we see used by restaurant buyers is the 401K conversion method. In this option, your 401K is actually converted to capital for the investment using the Internal Revenue Service guidelines and is tax free. In this case, your new 401K is made up of your restaurant purchase.


Benefits of 401K Conversion for purchasing a restaurant


Short Time Frame. A 401K conversion can be completed in as few as 30 days, a standard amount of time in a closing of a restaurant for sale.


Simple to execute. As long as you use a knowledgeable group like Culinary Concepts & Consulting, the effort on your part is minimal. A top class firm like CCC will process all of the paperwork, do the legal and accounting effort to keep you in compliance with the IRS and transfer the money in time for you to buy a restaurant.


No Tax Consequences


Since you are only borrowing against the securities in your 401K account, there is no “cash out” that would trigger a tax event with the Internal Revenue Service.


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