Can You Use a 401(k) as an SBA 504 Loan Down Payment?

401(k)s and SBA 504 Down Payments: The Basics

Yes, you can use your 401(k) as an SBA 504 loan down payment. Doing so offers some additional benefits, as well, including the fact that you will not incur tax penalties on the money that you pull from the fund for that purpose. 401(k) business financing, also called Rollovers for Business Startups, allows you to make a larger down payment than if you were using personal funds, and it also ensures that you have access to capital for a down payment regardless of your credit score.

However, you do need to meet a few requirements to make use of this option. First, you need to have a rollable retirement account – this could be your 401(k) account, but it could also be your IRA account, or a 403(b) account. Second, you need to have at least $50,000 in the account. You must also create a new C corporation, and then roll your funds into a new 401(k) plan within the new business. As soon as the funds appear in your C corporation bank account, you can use them for anything needed, including a 504 loan down payment.


We’re here to help you get the commercial financing you need. Simply fill out the form below for a risk-free consultation and a free SBA loan quote!