1. Pango Financial offers different route to
startup capital
Scott Goss, The News Journal
September 19, 2016
Barry Curewitz spent decades managing brands for some of the nation’s biggest companies.
So when he left corporate America to start a closet organizing business, the 52-year-old knew some
of the hurdles he would be facing.
“Starting any business requires a few things,” he said. “You need a good idea, some real initiative
and, of course, you’ve got to have money.”
Most entrepreneurs get a bank loan to get the cash they need to lease space, buy inventory and
launch a marketing campaign. Some daredevils max out their credit cards while others turn
to crowdfunding.
But Curewitz chose a lesser known – and potentially risky – option of tapping into his retirement
account through Pango Financial, a Greenville-based financial services company.
Launched in 2014, the subsidiary of the business-services conglomerate DeNovo Corp. has helped
more than 100 startup and franchise owners turn their 401(k) or other tax-deferred, retirement assets
into working capital – penalty free.
“It’s not for the faint of heart,” said Candice Caruso, president of Pango Financial. “But for people
with little savings or collateral, it may be the only way for them to achieve their dream of business
ownership.”
Marketed by Pango as the DreamSpark plan, the financing option is a complicated process rife with
regulatory hurdles and compliance pitfalls.
First, entrepreneurs must incorporate their business and then set up a retirement plan for future
employees. The owners then roll their retirement savings account from another job into the new
plan, tax free. Next, the new retirement plan invests those funds in stock issued by the new
corporation – money the business can then use to cover startup costs or equity for a loan backed by
the U.S. Small Business Administration.
On the upside, the plans allow entrepreneurs access to invest their retirement funds in a new
venture without facing an early-withdrawal penalty. And in theory, the new retirement plan will
replenish their 401(k) as the business becomes profitable.
Yet there’s no guarantee any business will become profitable. And entrepreneurs who gamble their
401(k) on a startup risk losing their retirement funds if the business fails.
“That’s why it’s so important to vet the business model first,” Caruso said. “We strongly encourage
our customers to work with a financial adviser, accountant or lawyer to be sure this is the right
choice for them.”
The IRS officially refers to arrangements like DreamSpark, essentially a loophole in the federal tax
code, as Rollovers as Business Start-Ups – a title that carries the decidedly derisive acronym ROBS.

2. While federal regulators warn of potential abuses and high tax penalties for noncompliance, the IRS
has held that the arrangements are legal.
A handful of financial service companies around the country now specialize in helping entrepreneurs
navigate the complex filing process and stay within the guidelines. Some of the biggest
include Guidant and Benetrends, where Caruso worked before joining Pango Financial – a
newcomer to the market.
Buy Photo
Candice Caruso is president of Pango Financial, a financial services company in Greenville that helps
entrepreneurs convert their retirement savings plans into capital for startups and franchises. (Photo: JENNIFER
CORBETT/THE NEWS JOURNAL)
The company currently employs a dozen people at its headquarters in the E.A. Delle Donne
Corporate Center off Del. 141. But most of its business is conducted online – allowing the company
to reach entrepreneurs across the country.
“What I saw here with Pango is an opportunity for innovation through efficiency and affordability,”
Caruso said. “That includes streamlining the administrative process without compromising the
expertise our customers require.”
Pango charges $3,745 to create a DreamSpark plan, plus an $89-per-month maintenance fee that
includes up to 10 participant accounts – a cost advertised as 25 percent less than its competitors.
The flat fee, rather than a sliding charge based on the rollover amount, means Pango has no
incentive to convince customers to invest any more than is required, Caruso said. The company has
an A+ rating by the Better Business Bureau.
Curewitz said he did some research before deciding that a retirement rollover would be a better
option for his business than putting up his home as collateral for a bank loan.

3. “It takes a lot of confidence to go this route because you’re gambling with your future,” he said. “But
to me, it beat saddling my new business with $1,000 to $2,000 in monthly loan payments before I
even had my first customer.”
His business, Closet Possible, recently celebrated its second anniversary and now employs a
handful of workers who install custom organizers and storage systems in homes around Pennington,
New Jersey.
“Fortunately, my wife has a pretty good pension and strong retirement account so we won’t starve if
the business goes under,” he said. “But, honestly, knowing my retirement is on the line just makes
me work harder.”
Contact business reporter Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter
@ScottGossDel.