There are many small companies and start ups short on money and eager to find investors. They don’t always know the variety of financing options available nor do they always qualify for bank loans or attract venture capital. The first and highest amount of money spent on small businesses comes from personal savings or lines of credit. The second largest source of funding comes from friends and family but this comes with a host of issues or challenges. One often over looked option comes from the self directed IRA investor who is able to step in and aid in a small business’s success while actively controlling their investment. This potentially is a win-win situation.
There are various ways to invest in a small business with your self directed IRA. It is possible to buy stock in a Limited Liability Company (LLC) or Partner Liability Company (PLC) but did you know it is possible to invest in equipment secured loans? This means, when a company has assets, the IRA provides funds that are secured by whatever assets the business owns. These assets might be vehicles or machines. The IRA investment gives the business working capital that is collateralized with assets that will be held in the IRA.
This investment type is really about the company and the belief that it will grow into a successful entity that translates into growth for your IRA. As an investor in an individual company instead of a large public company, it is possible to get to know the business plan, goals, customers, personalities and day-to-day operations. This sort of information gives insight into the investment, which supports the self-directed IRA basic precepts.
When there is little to no interest in equipment secured notes, it is worth reiterating that it is possible to invest in Limited Liability Companies (LLCs) or Partner Liability Companies (PLCs). Sometimes, these later investments, although not collaterized, better suit certain investors’ goals.
If you have questions about self directed IRA investments, be sure to contact Mountain West IRA and fill out the contact form.