SBA 7(a) Q&A
Short answer
Yes, funds from a Roth IRA (or other retirement accounts) can be used for equity injection through a compliant Rollover as Business Startup (ROBS) plan, but it's a complex process.
A ROBS plan allows individuals to use retirement funds to capitalize a new business without incurring taxes or penalties, by rolling them into a new C-corporation's qualified retirement plan, which then invests in the business. The ROBS structure must comply with IRS and Department of Labor regulations, and the SBA lender will require documentation of its proper establishment.
A buyer needs $150,000 for their equity injection. They establish a ROBS plan, rolling $150,000 from their Roth IRA into a new C-corporation's 401(k) plan. This 401(k) then purchases stock in the operating company, providing the required equity. The lender will scrutinize the ROBS setup for compliance.
Insider move
Lenders require assurance that the ROBS plan is legally compliant and properly structured to avoid future IRS penalties for the borrower and to ensure the equity is genuinely available and unencumbered. This involves significant due diligence on the ROBS provider and documentation.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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