401K business financing, also known as Rollovers for Business Start-ups (ROBS), is a small business and franchise funding method. ROBS allows you to withdraw money from your retirement account in order to start or buy a business without incurring an early withdrawal fee or tax penalty. This is not a loan; ROBS just gives you access to your own money, so that you can build the life you want without going into debt.
How Does It Work?
401K business financing (also known as Rollovers for Business Start-ups or ROBS) allows you to tap into your retirement account and use that money to start or buy a business or franchise. To access your money without triggering an early withdrawal fee or tax penalty, a ROBS structure must first be put in place. The structure has multiple moving parts, each of which must meet specific requirements to stay compliant with the IRS.
The Benefits of 401K Business Financing
Why should you use Rollovers for Business Start-ups to finance your small business or franchise? ROBS offers benefits not found in other forms of financing.
Debt-Free
Without loan interest to pay, you can make money faster. While 80% of small businesses fail within four to five years, small businesses started with ROBS are twice as likely to remain in business.
Invest in Yourself
It’s your money – use it. Instead of placing your money in a volatile market, you can make your money work for you. The number one reason people decide to open their own business is to be their own boss – now it’s your turn.
Cash-Rich
Start your business off strong. ROBS lets your business start out flush with cash, making those start-up costs much more manageable.
Down Payment for Other Financing
Your ROBS funding can also help you pursue other forms of financing, like SBA loans. Learn more
No Collateral
Many other forms of financing, such as bank loans, require you to provide collateral to qualify for funding. With ROBS, you eliminate the risk of using your home as collateral.
Easy Qualification
Unlike SBA loans, ROBS financing doesn’t require industry experience. And unlike other forms of financing, your credit score doesn’t play any factor in getting your funding.