Additional Rollovers
It’s not unusual for a small business or franchise to need another infusion of funding after your original financing. Maybe it’s time to expand your facility or open a new location. Maybe times are tough, and you need some extra funds to get through challenges. Rollovers for Business Start-ups (ROBS) provides a unique path to growth capital.
How to Use ROBS for Growth Capital
The first rollover you did with ROBS doesn’t have to be your only rollover. With ROBS, you can do multiple additional rollovers relatively easily – usually at a lower cost than your original ROBS set up.
If you have more retirement funds, you can use them now in another ROBS transaction. This includes funds you didn’t roll over in your original ROBS transaction or money in another eligible retirement account. Another rollover includes a Qualified Employer Stock (QES) transaction, very much like your first ROBS transaction.
The requirements for another QES transaction are simple:
- Your business was funded with a ROBS transaction
- You provide a business appraisal that shows a positive business value
- The proceeds are only used for legitimate business expenses
Guidant offers additional rollovers through our Additional Rollover Capital (ARC) program.
Steps for an Additional Rollover Through a Second QES
Each ROBS provider handles additional rollovers differently, so here we’ll cover what it’s like to do a second QES transaction with Guidant.
Step #1 – Qualify Your QES Transaction with an Expert
To get started with another rollover, reach out to your ROBS provider. At Guidant, we have in-house funding experts to walk you through each step. The first step is to make sure an additional rollover is possible. To do so, your funding specialist will help qualify your transaction and business. Your funding specialist will also be your dedicated contact through the rest of the process.
Qualification requires discussing how you want to use the funds and sharing some of your financials. If you qualify, you’ll make your payment to kick off the process.
Step #2 – Gather Documents for Certified Appraisal
After qualifying, we’ll do a business appraisal. The appraisal begins with you filling out a business questionnaire. Next, you’ll give us some information like federal tax returns, a recent balance sheet, a 12-month Profit & Loss statement, and future business projections. Our appraisal specialist will complete your appraisal in 7 to 10 business days.
Step #3 – Setup Rollover Bank Account
As we complete your business appraisal, we’ll also be working with one of our banking partners to set up the 401(k) bank accounts needed for the rollover. We usually start this process while you’re putting together your appraisal documents to make the process move as quickly as possible.
Step #4 – Legal Counsel Finalizes Documents
To finalize your additional rollover transaction, you’ll meet with Legal Counsel. With Guidant, this meeting is part of ARC, so you don’t pay anything extra. With the Legal Counsel, you’ll draft and adopt all required documents. These usually include a board resolution to approve the rollover and an update to your stock ledger. When your set up with the Legal Counsel and an appraisal are both complete, we’ll help you work with your current 401(k) plan custodian to initiate the rollover of funds.
Step #5 – Use Your New Capital Injection
With your business account now holding your new funds, you’re ready to use that money to grow your business or help you through a difficult time. Your ROBS provider should support you if you ever need more capital. With Guidant, all you need to do is contact your dedicated funding specialist. Your specialist will help you determine what further funding options are available to you.
The number of rollovers you do is only limited by your access to eligible retirement funds. The option for further cash injections gives you more flexibility as your business grows or times are tough.
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