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.
Our recommended ROBS firm, Guidant, is an expert at combining ROBS and 7a financing. Click here to talk with them today.
Disclaimer: We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. We recommend that you consult with your own lawyer, accountant, or other licensed professional for relevant business decisions. Click here to see our full disclaimer.
Product or company names, logos, and trademarks referred to on this site belong to their respective owners.