Can ROBS funding be used as a down payment for an SBA loan?
I received a question from a reader today who is planning to use a Rollover as Business Startup (ROBS) to purchase an existing machine shop business. He has $50,000 in his 401k, but the business costs $350,000. For the remaining money, he’s considering obtaining an SBA 7a loan. His question was, Can I use the ROBS alongside of an SBA 7A loan and count the rollover as the 10-20% personal investment/down payment required?
The answer to this is generally yes. In most cases, a lender will consider your ROBS funding as the equity injection/down payment on your SBA 7a loan. The reason? The money in your 401k account is your money, and it’s not a loan.
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