SBA 7(a) Q&A
Short answer
Yes, using 401k funds via a 'rollover for business startups' (ROBS) arrangement can be an eligible form of equity injection.
ROBS arrangements involve rolling over retirement funds into a new C-corporation (that you own) which then invests in your operating business. This structure allows tax-deferred retirement funds to be used without incurring early withdrawal penalties, effectively becoming equity in your business. Strict IRS and DOL rules apply.
A buyer needs $150,000 for equity injection. They roll over $150,000 from their 401k into a newly formed C-corporation, which then invests these funds into the acquired business. This counts as unencumbered equity.
Insider move
Lenders require assurance that the ROBS structure is legally sound and compliant with all IRS and DOL regulations. They will request documentation from the ROBS administrator and verify that the funds are genuinely available and properly injected as equity into the borrowing entity.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
SBA Form 1919 - Borrower Information Form
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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