Jeff – thank you for your insightful article. I’m a recently retired banker with 30 years of transactional experience, and no stranger to structuring deals. I’m now involved in a startup (1 of 2 founding members) and considering a ROBS for myself to (partially) fund initial equity. We did explore and have extensive conversations with an SBA lender, but as you can appreciate, the banking market is mostly closed to companies with < 2years operating history, which I accept as a former lender.
On the ROBS, is this something I can structure/establish on my own. Most of the ROBS articles/web hits direct me to a sponsor. I don’t have any reservations on paying for service value, but questioning, given my background/know-how, if I can set up the ROBS facility and maintain the reporting without paying third party fees. I tread cautiously as many of the articles I read citied negative news on ROBS sponsors taking advantage of new entrepreneurs in the way of significant fees, and some resulting audits/case studies by the IRS published on their website.So trying to determine is a ROBS sponsor is the only, or best route to pursue.
Appreciate if you have any feedback.
Kudos on your bio. Terrific CV and family story!
Great question. We typically suggest that small business owners work with a ROBS provider to set up an account. You clearly have a strong background in banking and finance, but ROBS also require expertise related to 401ks and employee benefits. Because ROBS involve setting up a 401k that invests in your new business, there are very specific employee benefit rules that need to be met. On the whole, it’s MUCH easier to set up and administer a ROBS if you use a provider. Guidant is the provider we typically suggest. You can find more information about Guidant and others by visiting our list of the best ROBS providers here: https://fitsmallbusiness.com/best-rollover-business-startup-robs-providers/
Hope this helps!