If you’re a small business owner, or are considering starting a small business or franchise, it’s likely that you’ve gathered information about Small Business Administration (SBA) loans.
Another option for start-ups is a technique that draws funds from your retirement account (tax penalty-free) as the equity, called Rollovers for Business Start-ups (ROBS).
In November 2019, the SBA changed parts of the approval process for those who combine these two loan options.
- If you’re applying for a newly originated SBA loan, and
Planning to use ROBS as the equity injection,
- Your entire request must be sent through the general SBA approval process.
- A full package must be submitted to SBA for approval.
This is necessary if you’re using the SBA to secure the guarantee of funds, even if the lender you plan to use has Preferred Lender Program (PLP) status.
For those with a tight timeline or who need approval quickly, this news will be disappointing.
Any newly originated SBA loans that use ROBS may take up to 4-6 weeks longer than normal to be approved.
This may change your business plan or timeline if your start-up is dependent on a specific approval date.
Get expert advice from Morgan & Associates while navigating the start-up process. We can help answer any questions you might have and give guidance to the best choices for your specific situation.