401k / ROBS Business Financing

If I use my retirement funds (e.g., 401k, IRA, etc.) to start or finance my business via a rollover as business startup (ROBS), can the business obtain a loan?


While the financing of a business via a ROBS transaction does not generally prohibit the business from obtaining a loan or other type of financing (e.g., SBA loan, seller financing, franchise financing, factoring, etc.), the business should consider the following:

  • While it would be acceptable for other owners of the business to guarantee repayment of the loan, the lender should not have any recourse against the 401k.
  • The business should not obtain the loan or other form of financing from a party that is related to you.

Note: A related person includes (i) you, (ii) your family member (incl. spouse), (iii) a company owned by you/your family member, (iv) an officer, director, partner, employee or other owner of a company owned by you/your family member, and (v) a company/person that provides services to you, your family member or a company owned by you/your family member.