How to Use an SBA Loan with a ROBS Plan

Gathering enough cash for a down payment for an SBA Loan can be a challenge.  However, there is an innovative way to secure an adequate amount of cash to get approved for a loan. 

Your 401(k), IRA or other qualified retirement account can be the solution for acquiring capital to get approval for an SBA Loan. Known in the industry as a Rollover as Business Startups (ROBS) strategy, this type of funding option was first introduced by Benetrends with the exclusive Rainmaker Plan®  and the Rainmaker Advantage Plan® .  Both plans allow you to utilize part or all of your existing retirement accounts to fund a required down payment for an SBA Loan.

The Best of Both Worlds

As seen in the recent post, SBA Loans: What They Are and How to Get Them,  while SBA loans have many advantages, there are still upfront commitments that need to be fulfilled. The SBA mandates that borrowers put a minimum 10% of the total project costs, and it applies to start-ups and acquisitions. However, most individual lenders, depending on the loan program and amount, may require higher amounts. It is common for borrowers to expect a 20, 25 or 30 percent equity injection.

For small business owners seeking to borrow hundreds of thousands of dollars, that equity injection can put a big obstacle in the middle of the road.

How to Use SBA Loans with ROBS Funding

That is where ROBS funding is a great option. Business owners can use the proceeds from a ROBS funding strategy, such as Benetrends’ Rainmaker Plan, to clear the path.


Entrepreneurs can use the funds acquired via the ROBS strategy as the down payment for an SBA loan. 

Here are a few of the advantages of using ROBS and SBA loans together:

    • Saving Money. SBA loans carry low interest rates and reasonable monthly payments. It makes sense to leverage your borrowing capability with loans with favorable terms. A larger down payment also means you can qualify for larger loan amounts.
    • Faster Launch. ROBS funds are available quickly, which means you can complete the SBA loan process sooner. 
    • Credibility. Your ability to provide a down payment of up to 30 percent demonstrates your fiscal responsibility and creditworthiness. 
    • Savings Preservation. Small business owners often need to turn to their personal savings or borrow from friends and family to get the new venture off the ground. With a ROBS and SBA loan strategy, you preserve those savings for other priorities.

One of the greatest advantages of ROBS 401(k) funding strategies is the ability to access needed capital without incurring penalties for early withdrawal or additional tax burden. It is a funding strategy designed to give you a high degree of flexibility in how the money is used.

For decades, Benetrends has been a leader in small business lending. Benetrends pioneered the ROBS approach to business financing. If you are looking for a roadmap for how to finance your small business, contact Benetrends to get the most out of ROBS 401(k) funding and SBA loans. To learn more, schedule a consultation.

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