What Types of Businesses Can Use Rollover Financing?

When it comes to funding your business venture, you have a variety of options at your disposal. From crowdfunding to venture capital to traditional bank loans, there’s a funding solution for every set of circumstances.

If you have a healthy nest egg in your 401(k) retirement account, consider using it to your advantage with a ROBS, or Rollover for Business Startups. Learn what types of businesses are eligible for rollover financing and make an informed decision.

C Corporations Only

If you plan to utilize your 401(k) as a business funding solution, you will need to incorporate your business as a C corp. This is because C corporations are the only businesses with the ability to sell stock—a key element of any 401(k) program.

A ROBS essentially rolls the funds from your old retirement account into a brand-new one in your business’s name. This new program allows you to offer stock options and retirement plans to your employees.

New Business Ventures

Do you have a revolutionary idea for your startup? Rollover financing can give you the initial financial boost you need to set your business up for success. Whether you’re starting an online boutique or a local landscaping business, a ROBS can help you achieve your goal.

A Quick Note:

Your business must be federally legal in order to secure ROBS financing—if you want to open a cannabis dispensary, for example, you’ll need to find another funding option.

Existing Businesses

Rollover financing can also provide a boost to businesses that have been in operation for a while but have hit a lull. The financing is called a Rollover for Business Startups, but that doesn’t mean it’s only for new businesses.


Franchising is a great way to get your feet wet in the world of business without starting from scratch. If you want to buy into an existing franchise, consider using a ROBS as a down payment on a loan. ROBS helps new business owners become more qualified borrowers. The retirement funds rolled over in a ROBS transaction can fulfill the cash requirement on an SBA loan and also helps business owners to preserve personal savings.

So, what types of businesses can use rollover financing? Plenty! Rollover business financing can help you start a brand-new business or buy into an existing one. As long as you are a bona fide employee of the business, your business is engaged in activities that actively sell a federally legal product or service, a ROBS is a financially sound way to fund your venture.

Curious about the other financing options out there? Use Pango Financial’s funding solutions tool to learn about more ways you can inject cash into your business.