You Don’t Need to Choose Just One
Starting a business can seem a lot like navigating a corn maze. You stand at the entrance, assuming there’s one clear path forward, one “right” business funding option. Pick your lane, cross your fingers, and hope it works out.
But that’s not really how it goes.
I’ve been helping entrepreneurs fund their businesses at Benetrends for years, and I’ve seen all kinds of different approaches. What’s a perfect fit for one person may not make sense for someone else. And one thing I can tell you right now? There’s no single “right” way to fund your dream venture. Only the way that’s right for you.
The entrepreneurs who successfully navigate the corn maze (with funding secured) are those who understand all their options and make decisions that fit their unique situation. Often, that means combining multiple business funding options.
When you learn how different funding paths can work together, you gain flexibility (and often a faster route) to making your dream venture a reality.
Why Consider Combining Business Funding Options?
Myth: You have to pick just one funding source.
Fact: There is flexibility in funding.
Many first-time business owners assume they have to choose a single path (ex: SBA loan, ROBS, Home Equity Loans, or cash), and stick with it. But that couldn’t be further from the truth.
Starting a business often means taking on significant financial responsibility, whether in business debt, personal debt, or a mix of both. That makes it challenging to grow your business in the early stages while you’re still trying to build revenue and stay profitable. And the reality is that debt doesn’t just affect your business. It interferes with your personal life too.
As a parent of two young boys, Michael and James, I want to make sure we can cover things like braces, future college planning, extracurricular activities, or just family vacations. I know many of you are in a similar situation. You’re not just funding a business, you’re managing your life, your family, and your financial priorities all at the same time.
Everybody is Different
That is why it is so important to remember that everyone’s situation is unique. Everybody’s financial circumstances are different, and just as importantly, everybody views money, debt, and interest very differently. What feels risky to one person might feel manageable to another, and what works for your neighbor’s business might not work for yours.
At Benetrends, we don’t push a single solution. Sometimes it makes more sense for a client to access an investment account like a 401(k) or IRA, tap into home equity, use cash savings, or even reach out to family and friends for support. We help lay out the options based on your situation and goals. Then it’s up to you to review those options with your spouse, partner, or trusted advisors and decide what works best for you and your business.
The key here is understanding two things. First, you CAN combine funding options. And second, knowing what exists, understanding your timeline (some funding methods take longer to process than others), and finding an expert to guide you through the possibilities can make all the difference.
ROBS & SBA Loans: A Match Made in Funding Heaven
ROBS: Why It’s An Attractive Option
A Rollover as Business Start-up (ROBS) is one of the funding options, and an attractive one at that because it allows you to access retirement account funds to finance your business without early withdrawal penalties or tax consequences. Some other reasons why ROBS is appealing:
- Access to capital without incurring personal or business debt
- Quick funding (in some cases, you can get funds in as few as 10 business days)
- Credit score does not matter
- Flexibility (only use what you need from your retirement account)
- Use your startup funds to pay yourself a salary (great for those of you with family and other financial obligations)
While ROBS is powerful on its own, combining it with an SBA loan often creates the ideal funding scenario for many entrepreneurs because it can be used as a cash injection for a small business administration loan.
Many banks require borrowers to provide 15% to 20% of the total cost as a cash injection or “skin in the game.” For example, if your total investment is $300,000, the bank will want to see around $60,000 from you. Not everyone has that sitting in a checking or savings account.
That’s where ROBS comes in. Many of our clients have retirement funds that can cover that equity injection, letting them preserve their personal cash for everyday life. And even if you do have the cash lying around, sometimes it just makes sense to keep it accessible. You never know when you might need it for unexpected expenses, like when your son decides to play baseball, football, and basketball all at the same time and suddenly you’re buying three sets of uniforms (that was me, by the way, sorry Mom and Dad).
Quick Tip: ROBS isn’t right for everyone. If your retirement balance is under $40,000 or your funds are in a non tax-deferred account (such as a Roth IRA) another funding option may be a better fit.
Other common options include:
- Personal loans or borrowing from family and friends
- Debt financing, such as home equity loans
- 401(k) participant loans
Your Funding Journey, Your Way
When you understand all your options and know how to combine them strategically, you can move forward with confidence. The main thing is knowing what’s out there and creating a funding strategy that actually works for you.
And with the right guidance, you won’t be wandering through the corn maze alone. We can help you find the “right” path so you can focus on turning your business dreams into reality.
If you’re ready to take that next step, fill out our contact form to schedule a one-on-one conversation with me.
Look, everyone’s situation is different, and every funding solution is unique. I want to understand where you are, where you’re trying to go, and help you figure out the smartest way to get there.
Let’s work together to navigate the corn maze and map your path to success!