Interview with David Nilssen, CEO of Guidant Financial Group

Q: Hi David, thanks for taking the time to talk with us. Many people are not aware that they can borrow from their retirement funds to buy a franchise. Can you explain exactly how this process works?

Small business funding using retirement funds is actually not a loan. Guidant Financial Group creates a structure that enables an entrepreneur to invest their retirement funds directly into their own business without taking a taxable distribution.

In order to do this, Guidant will set up a new, customized 401(k) plan and a corporation. Guidant will then roll the client’s existing retirement funds into the new 401(k). After this transfer is complete, the client, with Guidant’s help, will instruct the 401(k) to purchase stock in the new corporation. It’s much like if a client used their retirement funds to purchase stock in Microsoft except this is an investment into a privately held company – not a publicly traded one.

Once this stock transaction is complete, the corporation is now cash rich and able to purchase a business, franchise, or start a new venture.


Q: What are the benefits of using your retirement funds over traditional financing?

Probably half of our clients are buying their business in cash because they have enough capital inside their retirement plan. This is not a loan; meaning there are no payments to make and no interest to pay. Because our clients are financing their business debt-free, or at least reducing their amount of debt should they be using this financing method in conjunction with another loan, they have the capacity to be more profitable sooner. Any profits made by the business can be directly invested into growing the business, as opposed to paying off debt.

Additionally, as the retirement plan owns shares in the new business, as the business becomes profitable, so does the retirement account. Many of our clients are pleased to find out that they can invest their money in themselves, in something they can control.

Q: What types of retirement plans qualify for this program?

Any tax-deferred retirement account that can be rolled out of its existing account is eligible for this plan. Traditional IRAs, SEPs, 403(b)s, 401(k)s, etc. All of these can be used as long as the client is able to roll them out of their existing account.

Something to keep in mind is that many employer sponsored plans, meaning 401(k)s and 403(b)s, etc., generally cannot be rolled out of their existing account until the account holder has terminated employment with the corporation that sponsors the plan.

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