By Jim Cramer and Wally Konrad, former senior editor for Smart Money magazineNEW YORK ( TheStreet) -- The ads are peppered throughout the Internet: "Buy or start a small business using your retirement savings!" "Finance a business or a franchise from your 401(k) -- without debt!" Players like Guidant Financial and IRA Financial Group have armies of advisers waiting to tell you how to use a little known tax loophole to redirect your nest egg into what may be one of the riskiest investments ever: a small business. The tax situation works like this. If you invest your 401(k) funds from a former employer to buy or start a business, you will be able to do so without the taxes and penalties associated with early 401(k) withdrawals. Instead you roll over the money into the business's retirement plan and use that money to invest in stock in the company. The rollover part means you avoid taxes and penalties. At the same time, buying the stock provides cash to start or buy the business.