SBA loan basics
Short answer
Yes, funds from a 401(k) or IRA can be used for an SBA 7(a) down payment, but it typically involves a complex process like a Rollover for Business Startups (ROBS) arrangement.
A ROBS arrangement allows you to invest retirement funds into a new business without incurring early withdrawal penalties or taxes, provided it's structured correctly under IRS and Department of Labor rules. The funds are generally used to purchase stock in a C-Corp, which then invests in the business.
A borrower uses a ROBS plan to roll over $150,000 from their 401(k) into a new C-Corporation, which then injects that $150,000 as equity into the business being acquired, satisfying the down payment requirement.
Insider move
Lenders require extensive documentation to verify the legality and proper structuring of a ROBS plan. They need to ensure the funds are truly unencumbered equity and not a loan to the business, and that the arrangement is compliant with all relevant regulations.
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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